• One in three SMEs has access to loan
The recent growth in global manufacturing has not been accompanied by a parallel increase in employment, thereby indicating that the sector’s role in generating employment and supporting livelihoods could be at risk.
The United Nations Industrial Development Organisation (UNIDO) made this known in its 2023 International Yearbook of Industrial Statistics, which captures industrial production at the global, regional and country levels.
UNIDO, in the report, said over the past few years, global manufacturing has been growing at a steady pace, with the exception of the disruptions caused by the global financial crisis in 2008–2009 and the COVID-19 pandemic in 2020.
According to the report, global Manufacturing Value Added (MVA) per capita reached an all-time high in 2022 at $1,879 in constant 2015 prices, representing an increase of 14.2 per cent since 2015.
Following along this trajectory, the report said the share of MVA in Gross Domestic Product (GDP) has steadily increased from 16.2 per cent in 2015 to 16.8 per cent in 2022.
UNIDO, however, said: “In contrast, the proportion of manufacturing in total employment has been on an overall decline since the global financial crisis. This trend was further reinforced by the COVID-19 pandemic.
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“The manufacturing share in total employment fell from 14.2 per cent in 2015 to 13.6 per cent in 2021, the last year with complete data.
“The recent growth in global manufacturing has not been accompanied by a parallel increase in employment, therefore indicating that the sector’s role in generating employment and supporting livelihoods could be at risk.
“Moreover, gender inequalities in manufacturing employment persist.This calls for a comprehensive and targeted approach to encourage education and skills development for women and to promote the implementation of policies and practices that foster inclusion.”
On the report, which was accessed by The Nation, UNIDO Director-General Gerd Müller said while there has been progress in terms of the share of manufacturing in GDP, there has not been a comparable increase in manufacturing employment.
“This is a major cause of concern, especially for Least Developed Countries (LDCs) as job creation is crucial for poverty reduction,” he said.
The LDCs is the only group for which the United Nation Sustainable Development (SDG 9) industry-related targets declare an explicit objective: doubling the share of manufacturing in GDP and employment, equivalent to target shares of 24.2 per cent and 15.4 per cent by 2030.
However, LDCs, Nigeria inclusive, are facing a significant challenge in achieving these objectives.
Indeed, while the MVA-to-GDP ratio has been exhibiting an upward trend, with a short interruption caused by the COVID-19 crisis in 2020, it barely reached 14.0 per cent in 2022.
On the other hand, the share of manufacturing employment has stagnated since 2015 when it stood at 7.7 per cent, highlighting that the prospect of doubling it to 15.4 per cent remains distant.
However, the UNIDO report said there are differences within this group, with Asian LDCs achieving a significant improvement while African LDCs have recorded only a limited progress.
Regardless of the developmental stage of a country, UNIDO said increased access to financing for small industrial enterprises has the potential to promote significant economic growth.
It stated that monetary investments in small manufacturing enterprises help achieve an increase in production capacity, the implementation of innovative practices and the generation of new employment opportunities.
The UNIDO report said in contrast to their larger counterparts, small enterprises generally have the flexibility to explore novel business strategies without much resistance, as the former are usually constrained by earlier investments and existing industrial practices.
“Hence, small-scale industries are recognized as important innovators, not only as existing firms with flexible production processes that can adapt to new ideas and improvements, but also as start-ups driven by emerging technologies,” it said.
UNIDO, however, said according to the most recent data from the World Bank Enterprise Surveys, only one in three small manufacturing enterprises has a loan or line of credit, noting that access to loans remains skewed towards higher income countries.
“Therefore, it is imperative that measures be taken to facilitate the access of small companies in low-income economies and LDCs to financial services. This would contribute to supporting their operations, particularly during periods of high economic volatility, and address socioeconomic disparities around the globe.
“To assess the economic impact of these loans, the share of small-scale enterprises in total value added should also be closely monitored,” UNIDO recommended.
