Despite the plethora of challenges limiting productive activities in the economy, particularly the manufacturing sector in the Second Quarter of the year (Q2 2022), the Manufacturers CEO’s Confidence Index (MCCI) marginally increased to 54.6 points, up from 53.9 points recorded in the first quarter of the year.
A combination of poor access to foreign exchange (forex) for importation of raw materials not available locally, effect of rising global inflation and aggressive drive for revenue by the government constrained manufacturers in the second quarter of the year.
Other challenges included frequent collapse of the national grid, increase in price of diesel, scarcity of wheat and other manufacturing input due to the ongoing war in Europe, as well as widespread insecurity etc.
Despite these, the aggregate MCCI score increased to 54.6 points in the Q2, from 53.9 points in the first quarter of the year.
These were highlights of findings of the ‘Manufacturers CEOs Confidence Index (MCCI) for Second Quarter 2022’ released yesterday and made available to The Nation.
The MCCI is an index created by the Manufacturers Association of Nigeria (MAN) to measure changes in quarterly pulsation of manufacturing activities in relation to movement in the macro-economy and government policies.
The Index is, therefore, a barometer used by MAN to aggregate the views of CEOs of manufacturing companies on changes in the economy.
The MCCI has a baseline index of 50 points, which suggests a stationary point in the economy. Therefore, any index point above 50 points indicates that manufacturers have confidence in the economy and improvement in manufacturing performance, while any index point below 50 points indicates otherwise.
The more the index point tends to 100 points, the higher the level of confidence in the economy and improvement in manufacturing activity.
The aggregate MCCI score increased to 54.6 points in Q2 2022, from 53.9 points of the first quarter of the year, indicating a slight improved performance in the period and a growing confidence of manufacturers in the economy.
MAN President Ahmed Mansur said the meagre improvement in the index score in Q2 2022 implied that manufacturers’confidence in the economy slightly improved above what obtained in the preceding quarter.
He said this signified that manufacturers responded to the economic challenges that prevailed in the quarter with appropriate survival strategies and adjustments.
Such survival strategies and adjustments, according to Mansur, included remodeling of production operations, after the marginal slowdown experienced in the first quarter.
Mansur also attributed the increase in the aggregate index score to the feedback on the anticipated improvement in business condition, employment condition and production level in the third quarter of the year.
“Noteworthy is the fact that business conditions in the quarter under review were more challenging than what obtained in the first quarter of the year, just as employment conditions worsened.
“Nevertheless, the operating environment in the quarter under review was fairly better than the condition in the preceding quarter due to compelling adjustments made by the government, manufacturers and households in response to general increase in price, forex shortage, increasing cost of energy, scarcity of raw materials and many more, thrown up by the war in Europe, ” Mansur said.
The MAN president stated that the aggregate MCCI score of 54.6 points for the quarter under review, which is above the 50 baseline points by 4.6 points, showed that manufacturers still have minimal confidence in the economy, with the expectation of improvement in the operating environment.