The Manufacturers Association of Nigeria, MAN, in its half-year 2018 review revealed that the manufacturing sector witnessed increased investment inflow during the first six months of 2018 compared to the same period last year.
According to the review, fresh investment in the sector rose by as much as 72.9% to N305.6 billion compared to the N176.6% that was recorded in half-year 2017.
The review also revealed that between 2013 and 2017, investment inflows in the manufacturing sector stood at N4.12 trillion.
A breakdown of the investment inflows
According to the Manufacturers Association of Nigeria, majority of the investment inflows in H1 2018 went into assets construction.
“Assets under Construction ranked highest with investment worth N149.14 billion; investment in Plant and Machinery was N110.47 billion; Land and Building was N32.84 billion; Motor vehicle was N9.93 billion; and Furniture and Equipment was N4.18 billion in the first half of 2018.”
Meanwhile, the majority of the total manufacturing investment in the sector during the period under review, unsurprisingly went into the following: food production, beverage manufacturing and tobacco, respectively.
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Locations in Nigeria that witnessed the highest investment
In terms of the manufacturing hubs in Nigeria that witnessed the highest volume of investment inflow during the period, the MAN report lists the Ogun zone as the highest recipient followed by the Apapa zone and the Ikeja zone.
In specific terms:
- Ogun Zone received investment inflows worth N95.31 billion,
- Apapa Zone recieved N93.67 billion,
- While the Ikeja zone received N54.80 billion.
“Investment in Ogun zone stood at N95.31 billion in the first half of 2018, up by N1.55 billion (1.7 percent) from N93.76 billion recorded in the corresponding half of 2017. However, it shows an increase of N44.2 billion (86.5 percent) from N51.11 billion recorded in the preceding half.”
What encouraged the positive performance?
According to MAN, the overall recorded performance was influenced by relatively improved macroeconomic indicators in the country. For instance, the country’s external reserve grew, foreign exchange was considerably stable, crude prices were stable for the most part, even as the inflation rate decreased.
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But despite investments, consumption were on the low
Unfortunately, Nigerian consumers did not buy as much goods during the period commensurate with the increased level of investment. This is due mainly to the high prices which were influenced by the cost of production. Moreover, “over-regulation and the attendant multiple charges” of manufacturers also contributed to high prices which in turn deterred consumers.
This had negative impacts
Consequently, the reduction in the consumption rate negatively impacted the growth of some manufacturers; even some of the biggest ones. Take for instance Dangote Sugar Refineries Plc, whose revenue slumped as much as 28.4% to N116.8 from N163 billion. In the same vein, the company’s profit after tax also declined from N26.6 billion in half year 2017 to N16.7 billion in the same period in 2018.