The Manufacturers Association of Nigeria (MAN) has expressed concerns about the challenging outlook for manufacturers in the first six months of 2024 and called on the Federal Government to address the current $7 billion Forex Backlog.
In its “Manufacturing Sector Outlook for 2024,” MAN anticipates a difficult start to the year for industry players. The association’s Director-General highlighted the potential challenges in the coming months, emphasizing the need for the government’s intervention.
The report suggests that the sector’s real growth in 2024 may be around 3.2%, with a contribution to the economy exceeding 10%. However, the first half of the year is expected to be challenging, with the possibility of a subtle recovery in the third quarter.
According to MAN, average capacity utilization is likely to hover around 50%, constrained by forex-related challenges and a high inflation rate, at least until mid-year. The report emphasizes the dependence on policy stimulus, domestic growth strategies, and supportive trade measures for a meaningful recovery in the later part of the year.
The manufacturing sector might experience a modest improvement in output as challenges related to forex and interest rates are expected to subside from the third quarter. MAN anticipates higher manufacturing output starting from the beginning of Q3, with the government disbursing capital provisions of the budget to abandoned, ongoing, and new capital projects, showing special preference for locally made products.
MAN recommended that the government deploy cost savings from fuel subsidy to implement production-focused policies, along with structural measures to combat inflationary pressures arising from insecurity, energy costs, and transportation expenses. The association also called for an overhaul of the power sector and incentivized investment in renewables to enhance electricity generation and promote energy-cost efficiency.
In addition, MAN urged the government to prioritize forex and credit allocation to manufacturers and reduce the number of Bureau de Change (BDC) operators, focusing on large and well-established entities to curb excesses and enhance effective management and supervision.
As manufacturers brace for a challenging period, the role of government intervention and policy measures becomes crucial in navigating uncertainties and supporting the growth of the sector.
