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MAN pegs Nigeria’s aggregate manufacturing output at N483bn

By BusinessNews Staff on September 4, 2014

The Manufacturers Association of Nigeria (MAN) in its Annual Report released at the weekend put the total value of industrial and manufacturing production in the country at N483.53 billion. The figure represents an increase by 121 per cent.
It was the latest figure released by MAN for the end of 2013 and represented 36 per cent of the N353.20 billion recorded in June that same year.

MAN said the figures released were obtained from an extensive survey carried out on its over 2000 member companies who are major manufacturers in the country.

The manufacturers’ umbrella body noted that the increase recorded was as a result of various incentives directed at the manufacturing sector through federal government proactive formulations, such as backward integration policy on raw material sourcing, local content act and the Nigerian Automobile Industry Development Plan.
According to the association, other factors that accounted for the improvement include stability in macro-economic indices and increased investment by operators.

The survey, it added, indicated that in the year under review, unplanned inventory reduced to N17.34 billion from N21.75 billion in the first half of the year, which was an improvement on the N33.17 billion recorded in the corresponding period of 2012.
“The reduction in unplanned inventory was a result of restrictions on some imported products and improved sale strategy. Strategic inventory management on the part of manufacturers also had a great impact on the general reduction in the level of unsold stocks of manufactured goods as recorded in the year,” MAN said.
The manufacturers stated that improved production output in the manufacturing sector led to an increased level of capacity utilisation, representing an average of 52.7 per cent in 2013 as against the 46.6 recorded the previous year.
According to MAN, the year witnessed an increased number of new investors in various sectors of manufacturing saying that, this has contributed to the increase in the value of investment by 44 per cent.

“Improved performance recorded in manufacturing output; capacity utilisation and employment were the direct result of massive investments embarked upon by some existing members and the new entrants in the last two years. This resulted from the predictable macro-economic environment giving the stability in all major indices,” MAN noted.
The survey further revealed that the improved level of sales, which was the result of innovations and improved packaging; particularly in the food and beverages sector and the strategic inventory management of finished goods were made possible through various investments in assets across the sectors.

MAN sad there has been a continuous increase in the use of local raw materials by manufacturers, as the percentage sourced locally moved remarkably from 47.6 per cent by end of 2012 to an average of 58.58 per cent in December 2013.

On power supply, MAN noted that at the end of 2013, electricity supply in the country remained a major challenge and had a negative impact on the manufacturing sector stressing that, in December 2013, power supply dipped by 450MW from the peak generation of 4,517MW where most parts of the country experienced massive fluctuation in electricity supply.
“Part of the challenges alleged were inadequate gas supply, shortage of water in the various dams across the federation, vandalism, theft of power equipment and poor funding. These have in one way or the other, resulted in shutdown of the power stations as well as power rationing nationwide,” the association said.

It expressed hope that when the initial challenges in the power sector reform are fully resolved, the new owners of electricity generation and distribution companies would settle down and resolve the problem of power generation, transmission and distribution in the country.

MAN noted that funding is still a major challenge to manufacturing firms in investing in modern machines, information and human resource developments, which are critical to reducing production costs; raising productivity and improving competitiveness maintaining that, high interest rates and caution on the part of financial institutions to fully embrace the new Central Bank of Nigeria (CBN’s) lending guidelines, created challenges for corporate investment, thereby limiting the growth of local industries.

“Average interest rate on bank loans as reported by MAN members at the end of 2013 was 20.4 per cent. The lending rates ranged from 12 per cent to 35 per cent in 2013, while the rate on Bank of Industry (BOI), CBN special intervention window was 7 per cent. The issue of high interest rate on bank loans has been one of the major constraints to the development of manufacturing in Nigeria. A policy, which will embrace alternative funding through development finance arrangement, will be an ideal solution,” it said.

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