Amid Unfavourable Environment, Manufacturing Output Rebounds, Hits N7trn
In the third quarter of the year, the manufacturing sector recorded a total output of N7.1tn.
The N7.1tn is N1.7tn higher than N5.4tn recorded in the second quarter of 2021.
This is according to data contained in the latest Gross Domestic Product report released by the Nigerian Bureau of Statistics.
The output of N7.1tn for Q3 2021 also represents an increase of N1.6tn when compared to the N5.5tn recorded in the Q3 2020.
According to the report, 11 out the of the 13 subsectors of the manufacturing sector recorded positive economic performance quarter-on-quarter while only two subsectors experienced a decline in productivity.
The 11 subsectors that recorded increase in economic performance include cement, from N1.1tn in Q2 2021 to N1.7tn in Q3 2021; food, beverage and tobacco, from N1.9tn to N2.3tn; textile, apparel and footwear, from N1.1tn to N1.4tn; and wood and wood products, from N107.6bn to N126.5bn.
Other subsectors are pulp, paper and paper products, from N70.7bn to N96.5bn; chemical and pharmaceutical products, from N149.3bn to N168.5bn; non-metallic products, from N346.2bn to N448.4bn; plastic and rubber products, from N145.3bn to N199.2bn; electrical and electronics, from N3.7bn to N4.8bn; basic metal, iron and steel, from N96.9bn to N143.3bn; and other manufacturing, from N129.4bn to N255.8bn.
Meanwhile, the oil refinery subsector recorded a significant decline in productivity within the period under review, from N6.7bn to N7.8bn.
Also, output from the motor vehicles and assembly subsector fell slightly to N255.2bn from N255.3bn.
The growth recorded in the manufacturing sector in Q3 2021 was despite numerous challenges affecting the industry as highlighted by manufacturers and other stakeholders.
Speaking at the 49th annual general meeting of the Manufacturers Association of Nigeria in October, the President of the African Development Bank, Akinwumi Adesina, identified high cost and unreliable power supply as major obstacles to manufacturing in the country.
He had said, “Today, the major challenge facing Nigeria’s manufacturing is the very high cost and unreliability of electricity supplies.
“Load shedding and the inconsistent availability of electrical power have resulted in high and uncompetitive manufacturing costs.”
Another challenge he listed was dilapidated transportation infrastructure, including ports, highways, and railways among others.
Similarly, the Manufacturers Association of Nigeria had lamented that 45 per cent of the production cost of manufacturers in Nigeria was spent on electricity.
Speaking on the development, an economist and the head of Department of Economics, Olabisi Onabanjo University, Dr Seyi Adelowokan, said the data on improved performance in the manufacturing sector was doubtful as it didn’t correspond with the realities in the sector.
He however noted that the disparity might be as a result of the failure of the Bureau to adjust the data obtained for inflation.
“Another aspect is that, you know that there is inflation in Nigeria generally, and if those figures are estimated based on the changes in prices and it isn’t adjusted for inflation, then the figure will continue to rise, because prices are rising,” he said.
Another economic analyst and the Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr Johnson Chukwu, stated that at best, the growth in the manufacturing sector was as a result of base effect – the economy returning to normalcy from the devastating effects of the COVID-19 pandemic on sectorial growth in 2020.
“So some of the growths we are witnessing today are at best evening out, that is normalisation, bringing things to the way they were before COVID-19,” he added.
He therefore urged the government to address the infrastructural deficit in the manufacturing sector to improve the competitiveness of the sector and drive increased exports.