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Nigeria’s manufacturing sector contracts, as key components shrink 

The CBN Purchasing Managers’ Index shows that Nigeria’s manufacturing sector slowed down in the month of September 2019. 



CBN, Key lending rate, CBN to boost creative industry with N22 billion , CBN increases LDR to 65%, sets December deadline, External reserves drop by $3.2 billion in Q3’19 , Banks' loans to Oil and Gas, Power, other sectors drop by N411.8 billion 

The Central Bank of Nigeria (CBN) Purchasing Managers’ Index shows that Nigeria’s manufacturing sector slowed down in the month of September 2019.

According to the CBN report, the manufacturing sector Purchasing Managers’ Index (PMI) stood at 57.7 index points, as against 57.9 index points posted in the previous month.

[READ MORE: Nigeria needs $100 billion annually to fix infrastructural deficit – Finance Minister]

Manufacturing Sector: According to the latest PMI report, the manufacturing sector grew at a slower rate, as major manufacturing sector’s components shrunk within the period. The slower growth recorded in the manufacturing sector was triggered by weaker quantity of purchases, export, production, employment and raw materials level.

  • The breakdown shows that new export orders declined the most by -0.9 points index. Other manufacturing sector indices that declined include production level which dropped by -0.2 point index, employment (-0.5 points) and raw materials declined by -0.6 index point.
  • Several businesses responsible for the drop in production level include cement, electrical equipment, food, beverage and tobacco products. All these businesses declined.
  • The employment level was also down and this emanated from the cement business, chemical and pharmaceutical products.
  • For raw materials, major declines were recorded in food, beverage and tobacco products, furniture products and non-metallic mineral products.

Non-Manufacturing PMI: The composite PMI for the nonmanufacturing sector also slowed as it stood at 58.0 points in September 2019, indicating slow expansion in the Non-manufacturing sector. The index grew at a slower rate when compared to its level in August 2019. Fourteen of the 17 surveyed subsectors recorded growth in the following order:

  • utilities;
  • information & communication;
  • wholesale/retail trade;
  • arts, entertainment & recreation;
  • transportation & warehousing;
  • agriculture;
  • repair, maintenance/washing of motor vehicles;
  • construction;
  • finance & insurance;
  • accommodation & food services;
  • educational services;
  • health care & social assistance;
  • real estate rental & leasing; and
  • electricity, gas, steam & air conditioning supply.

Few bright spots: One of the key indicators in determining whether a business is witnessing decline or not is the inventory. Companies make money when they sell products and services, and for those whose inventories pile up, it is a sign that sales will decline.

The rise in orders is evidently a sure sign that businesses are attracting the right customers and consequently recording growth.

While the manufacturing sector slowed, the CBN report shows that 2 sub sectors in the manufacturing sector recorded fast growth in ‘new orders’, and this implies improved business transactions. According to the report, the sectors include chemical and pharmaceutical products and non-metallic mineral products, while most products grew at a slower pace.

[READ ALSO: Nigeria spends N1.9 trillion on goods from China in H1, up by 88%]

The implications: For the manufacturing sector, any reading above 50 is considered a good number as it signals a healthy expansion. Hence, the CBN PMI at 57.7 index points means the manufacturing sector is growing but at a slower pace.

  • Meanwhile, the slow down also suggests that businesses in the manufacturing sector witnessed a decline and this may dampen the outlook of the sector. Recall that in Q2 2019, the manufacturing sector suffered a -0.13% contraction, from 0.81% in the previous quarter.
  • One factor that may be responsible for the slow growth in the sector in Q2 is over-dependence on imported manufactured goods. For instance, between January to June 2019, Nigeria imported N5.2 trillion worth of imported goods. This further reinforces the concerns of manufacturers’ association on the need for Nigeria to tread cautiously in implementing the continental free trade agreement.
  • Hence, while the import of manufactured goods is rising, this may frustrate local manufacturers of similar goods, and eventually result in further contraction of Nigeria’s manufacturing sector.


Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Why there is a massive sell-off of US stocks



Nigerian stocks record worst quarterly drop since 2009

The United States 10-year Treasury yields rose to a new one-year high of  1.5% on Thursday sending the equities market on a bearish run. The US Dow Jones Industrial Average was down 1.5% as of 7.30 pm on Thursday falling by a whopping 500 points. The S&P 500 and NASDAQ were both down 2% and 2.75% respectively ad the sell-offs intensified.

Global bond prices also fell lower on Thursday and investors around the world sold off massively as they feared higher inflation could erode bond yields.

What is going on?

Investors are worried that massive injection of stimulus in the US and in most European countries could trigger higher inflation which will erode profits on bond yields assuming their fears materializes.

US inflation rate for the month of January 2021 was 1.4% the same as the month of December 2020. US inflation was as high as 2.3% a year ago yet investors remain worried. In response to this fear, bond yields have hit multiple one-year highs. This fear is has now spread to the US equities market.

US President Joe Biden is seeking a $1.9 trillion stimulus package which many had hoped will please the market. However, it appears investors are rather afraid that it could trigger a “reflation” eroding whatever positive jolt it could have had on the wider economy.

What this means for your stocks

A rise in interest rates is triggering a massive sell-off in US stocks ad investors fear a return to higher inflation could signal the market could be entering a bearish era. Stocks have hit multi-year highs since January as investors poured in billions of dollars into stocks. If this sell-off persists then investors in US stocks could see the value of their portfolio plummet.

Tech Stocks are particularly affected by the sell-offs with investors dumping heavyweights like Netflix, Tesla, Amazon, Microsoft, Facebook, Google all falling. Meme stocks, an acronym for stocks popular with Reddit and Twitter retail investors have also suffered losses.

Nairametrics SSN  subscribers are advised to track their portfolios accordingly.

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Buharinomics: In Stagflation we trust

We explain why President Buhari is synonymous with stagflation and what he can do to get us out of it.



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Economists define stagflation as a period of slow economic growth, high unemployment rate and higher inflation. It is one of the worst kinds of economic state of affairs that often leads to poverty, insecurity and social-economic crisis. It is a sticky economic conundrum that is incredibly difficult to escape from.

The latest data from the National Bureau of Statistics reveal Nigeria barely slipped out of a recession in the 4th quarter of 2020 with a 0.11% GDP Growth rate. Despite being a welcome news, it is the slowest GDP Growth rate on record at least since 2011.

Earlier on, in the same week, the Statistics Bureau also released inflation data for the month of January revealing an inflation rate of 16.47%, the highest since April 2017, and affirming Nigeria’s galloping inflation status.

Nigeria is in a protracted state of stagflation and has been in the state since the Buhari administration came into power in 2015. Nigeria’s Gross Domestic product per quarter has averaged 0.18% in the last 6 years since this administration got elected into power. The Buhari government has also presided over a consumer price index change of 108.6%, meaning that prices of nearly every measurable item have doubled in the last 6 years.

Flashback to the first installment of General Buhari and the story is all too familiar. Nigeria’s GDP Growth rate for 1983, 1984 was -10.92% and -1.12% respectively. Annual inflation rate in the same period was 17.2% and 23.8% respectively.

Buharinomics is synonymous with Stagflation.

How did we get here?

While it all started from the drop in oil prices in 2014, a cocktail of economic policies from the Buhari-led administration is largely blamed for Nigeria’s economic quagmire. Since it came into power, the government has adopted economic policies that are centered around defending the local currency, import substitution and social spending.

For all its good intentions, these policies are pregnant with side effects that potentially erase its positives, turning into cancer of cataclysmic proportions.

For example, while the policy of defending the exchange rate stabilized the naira between 2016 and 2019, it cost the CBN trillions in interest payments and high cost of borrowing.

The high cost of borrowing is associated with higher inflation and stunted economic growth as small businesses cannot secure the funding required to expand and even when they do it is expensive.

The policy of promoting locally made goods over their foreign alternatives has also led to multiple bans of access to forex to imports, higher customs duties and taxes on imports and a crushing border closure all of which have combined to send inflation off the roof.

Nigeria’s inflation rate conundrum can also be traced to supply-side challenges such as insecurity, logistic gridlocks, corruption and inefficiencies at the Nations ports and an overall bitter experience in the nation’s ease of doing business.

How to get out of Stagflation

There is no clear-cut set of rules that can end stagflation however a rethink of the government’s approach to policymaking and implementation could be a good first step to control it, especially if the target is one of the major causes of stagflation, supply-side inflation.

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To address Nigeria’s challenges with Stagflation, the Buhari Government will have to swallow its pride and relinquish trust in moribund policies that have not worked. Wholesome of Nigeria’s economic challenges are out of its control (like fall in oil prices) a huge chunk of it is self-inflicted and as such within its control. For example, it must fix the spate of insecurity around the country by being more deliberate with dealing with bandits, militant herdsmen and terrorists.


It must declare a national emergency in the nation’s ports and reduce the lead time to clearing goods for import or export. It must address the logistics issues affecting the distribution of farm produce from a place of planting to the destination of consumption.

Monetary policy restrictions stifling trade must be loosened and replaced with a reward policy system that encourages exports as against imports without banning cheap substitutes that have no local production advantage. We need new regulations and laws that favour private sector investments, protect property and enable capital formation. A case in point is the perennial PIB Bill that gets debated year after year.

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These are not novel ideas within economic circles and as such cannot be that difficult to conceive and concede to doing. The challenges have always been the will and courage to act in defiance of snags such as vested interests, political ideology, endemic bureaucracy, and corruption. This government has shown in the past that it can roll back on unpopular policies except that it does it too late with not enough time to create a positive impact.

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