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OPS Excited over Manufacturing Sector’s Recovery from COVID-19 Headwinds

OPS Excited over Manufacturing Sector’s Recovery from COVID-19 Headwinds

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By Dike Onwuamaeze

The Manufacturers Association of Nigeria (MAN) and the Lagos Chamber of Commerce and Industry (LCCI) have expressed excitement over the rebound of the manufacturing sector in the first quarter of 2021, which recorded a growth rate that was higher than its pre-COVID-19 performance.

Data released by the National Bureau of Statistics (NBS) on Sunday showed that the Gross Domestic Product (GDP) grew by 0.51 per cent (year-on-year) in the first quarter of 2021, (Q1 2021) compared with the 0.11 per cent recorded in the fourth quarter (Q4) 2020.

The data also showed that the manufacturing sector recorded a 3.40 per cent growth rate in Q1 2021 after recording negative growth in the Q4 of 2020.

In addition, its Q1 2021 performance was also higher than the 0.81 per cent and 0.43 per cent it recorded in Q1 2019 and Q1 2020 respectively, which were pre-COVID-19 era.
MAN Director-General, Mr. Segun Ajayi-Kadir, while reacting to the GDP report said yesterday that the reported 3.40 per cent growth rate of the manufacturing sector in Q1 2021 came as a surprise, giving the numerous challenges facing the sector.

He said: “We are currently experiencing the rising cost of manufacturing inputs, so it is surprising to see a rate higher than the rate of 0.81per cent in Q1 2019 and 0.43 per cent of Q1 2020, which were relatively stable periods.

“In Q1 2021, manufacturing activities more or less rebounded to the level of pre-COVID-19 period. So, it is expected that the sector will present a better performance in Q1 2021 than what obtained in Q4 2020. Particularly the food, beverage, and tobacco and the chemical and pharmaceutical sub-sectors are expected to post higher growths due to the relatively higher capacities utilisation they enjoyed since 2020.

“In addition, it is not out of place for the cement and basic metal, iron, and steel sector to present high growths in Q1 2021 due to the increased level of construction work going on in different parts of the country backed by government spending across the country.”

He added that the NBS’s Q1 2021 report on the manufacturing sector corroborated MAN’s Manufacturers CEOs Confidence Index (MCCI) of Q1 2021. The MCCI is a quarterly survey of the manufacturing sector. Its index showed improvement in the confidence of manufacturers in a good number of manufacturing sectoral groups.

He, however, appealed to the “government to intensify its intervention initiatives and follow through on the cost reduction aspect of ease of doing business. There is urgent need to create a friendlier operating environment and deliberately support the productive sector in a strategic manner.”

LCCI Director-General, Dr. Muda Yusuf, also stated that the recovery of the manufacturing sector from a negative growth territory in Q4 2020 to a positive growth level of 3.4 per cent in Q1 2021 was a surprise.

Yusuf said: “The sector has been grappling with an unprecedented foreign exchange illiquidity crisis over the past few months. This is coupled with the structural, policy, institutional and macroeconomic challenges that have bedeviled the sector. The data does not reflect the reality of the experiences of most manufacturers.”

But the Chief Consultant of the B. Adedipe Associates Limited, Dr. Biodun Adedipe, said during the breakfast meeting of the Nigeria-South Africa Chamber of Commerce held last Thursday that the country’s manufacturing sector was recovering contrary to the sentiments that the manufacturing entities are closing down.

According to him, there are enough activities along the Lagos-Ibadan Expressway and the Ogun State corridor where new factories are sprouting up to confirm the survey outcomes of the NBS.

He said: “These things are real. I can tell you here on authority that there are many conversations with foreign investors trying to put money into manufacturing in Nigeria as we speak. These are real foreign investors. I will not want us to go with the sentiment that nothing is happening there. You will see manufacturing always growing.”

Source: https://www.thisdaylive.com/index.php/2021/05/25/ops-excited-over-manufacturing-sectors-recovery-from-covid-19-headwinds/

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