Manufacturers lament high production cost, interest rate

By Okwy Iroegbu-Chikezie

The Manufacturers Association of Nigeria (MAN) has decried the high cost of manufacturing in the country.

MAN, in its “Executive summary of 2019 manufacturing outlook,’’ lamented that though there was a slight improvement in electricity supply, manufacturing suffered as a result of many problems.

The report signed by its Director-General, Segun Ajayi-Kadir, stated that the sector’s capacity utilisation slowed to 54.1 percent in the first half of last year from 54.50 percent recorded in same half of 2018, indicating 0.4 percentage point decline over the period.

The fall in capacity utilisation was blamed on the poor macroeconomic, regulatory and infrastructure.

He stated there was decline in capacity utilisation in Food, Beverage and Tobacco group at 55.3 percent, Wood & Wood Products at 49.4 percent, Chemical & Pharmaceutical at 47.4 percent and non-metallic at 52.7 percent, among others.

The MAN boss said industrial zones analyses presented a mixed-bag of performance, adding that while capacity utilisation in most of the zones increased in the first half of last year against the performance of the corresponding half of 2018, others declined when compared with the second half of 2018.

For instance, the report revealed that capacity utilisation in the Ikeja zone of MAN increased to 68.14 percent; Ogun 69.19 percent, Apapa 69.46 percent, Kano Sharada/Challawa 55.11 percent and Kaduna 49.5 percent. Others are Anambra/Enugu with 43.8 percent, Rivers stood at 54.07 percent.

“Conversely, capacity utilisation in  Imo/Abia zone declined to 34.72 percent, Kwara/Kogi 44.13 percent and Abuja  at 39.13 percent  while Kwara/Kogi zone declined to 44.13 percent in the first half of 2019 as against 49.67 percent and 53.5 percent recorded in the first and second halves of 2018 apiece,” the MAN boss explained.

The report observed that manufacturing production in the first half of last year was affected by the same challenges that hindered capacity utilisation in the period, such as poor macroeconomic ambience, infrastructure issues and poor regulation by Government agencies.

He regretted that contrary to expectation, utilisation of local raw materials in the Textile, Wearing Apparel, Carpet, Leather & Leather Footwear sector stood at 54.6 percent in the first half of 2019, representing 8.09 and 3.0 percentage point decline from 62.69 percent and 57.6 percent recorded in the same half of 2018 and the preceding half.