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Economy & Politics

Manufacturing PMI dips further as recession scare looms

As key sectors continue to suffer contraction, unemployment may surge in the economy.



Manufacturing PMI dips further as recession scare looms, Purchasing Managers' Index

Nigeria’s Manufacturing sector has continued to witness contraction, as the economy grapples with the spiral effects of the COVID-19 pandemic. According to the latest data released by the Central Bank of Nigeria, manufacturing PMI (i.e., Purchasing Manager’s Index) in the month of June stood at 41.1. 

The latest figure indicates contraction in the manufacturing sector for the second time, a decline compared to 42.4 and 51.1 index points recorded in May and March 2020 respectively. 

Key sectors wobble in contraction  

Of the 14 surveyed subsectors, 5 subsectors reported growth (above 50% threshold) in the month of June in the following order: electrical equipment; cement; petroleum & coal products; transportation equipment; and paper products.  

READ MORE: Nigeria’s external reserve drop by $261 million in 15 days, oil firms to sell forex to CBN 

However, the remaining 9 subsectors reported declines in the following order printing & related support activities; textile, apparel, leather & footwear; primary metal; plastics & rubber products; nonmetallic mineral products; fabricated metal products; food, beverage & tobacco products; chemical & pharmaceutical products and furniture & related products. 

As the manufacturing index recorded a decline, production level, new orders, employment level, and raw material inventories all recorded further decline compared to their May 2020 figures. 

The composite PMI for the non-manufacturing sector stood at 35.7 points in June 2020, indicating contraction for the third consecutive month, but showing a gradual recovery in non-manufacturing activities when compared to 25.3 recorded in May 2020. 

READ MORE: CBN’s forex intervention is counter-productive – Manufacturers 

Also, all 17 subsectors surveyed under the non-manufacturing sector recorded declines. 

What this means

PMI is a survey that is conducted by the Statistics Department of the Central Bank of Nigeria that shows the changes in the level of business activities in the current month compared with the preceding month. 

For each of the indicators measured, this report shows the diffusion index of the responses, which is computed as the percentage of responses with positive change plus half of the percentage of those reporting no change, except for supplier delivery time, which is computed as the percentage of responses with negative change plus half of the percentage of those reporting no change. 

READ ALSO: MARKET UPDATE: CBN’s historic agriculture lending; Is it yielding the desired results? 

The latest PMI figure below 50 for the second consecutive months implies that Nigeria may post a bigger than expected contraction in the second quarter of 2020, as yet uncertainty clouds the global economy in the remaining quarters of the year.  

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Also, as key sectors continue to suffer contraction, unemployment may surge in the economy. According to the Economic sustainability plan recently released by the Nigerian government, unemployment may hit c.40% by the end of 2020. 


You may download the PMI report by clicking here

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Nairametrics Research team tracks, collates, maintains and manages a rich database of macro-economic and micro-economic data from Nigeria and Africa. Our analysts share some of the data collated on Nairametrics, using formats such as docs, tables and charts etc. The team also publishes research based analysis as articles on a regular basis.

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Economy & Politics

CBN extends Covid-19 forbearance for intervention loans by another 12 months

CBN will continue to charge an interest rate of 5% for its intervention loans for another 1 year.



New CBN guidelines ban MMOs, PSPs, Operators from receiving diaspora remittances

The Central Bank of Nigeria has announced an extension of its regulatory forbearance for the restructuring of its intervention facilities by another 12 months.

In a circular signed by Dr. Kevin Amugo, the Director of Financial Policy and Regulatory. the apex bank said it will continue to charge its borrowers an interest rate of 5% per annum as against the 9% originally offered. The CBN had on March 20th reduced the interest rates on its intervention loans from 9% to 5% as part of its response to the economic crunch brought on by Covid-19 induced lockdowns.

The CBN also offered to rollover moratorium granted on all principal payments on a case by case basis. All credit facilities had been granted a one-year moratorium starting from march 1, 2020 when the pandemic first gripped Nigeria.

READ: Analysing the Central Bank of Nigeria’s Dollar Remittance Policy

See excerpt from Circular

“The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from 9% to 5% per annum for one-year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 Pandemic on the Nigerian economy.”

Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

Following the expiration of the above timelines, the CBN hereby approves as follows:
1) The extension by another twelve (12) months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities;

2) The roll-over of the moratorium on the above facilities shall be considered on a case by case basis.

READ: Nigeria attracts more FDI than FPI for the first time in 4 years

What this means

Companies who secured intervention funds from the CBN or through any of its on-lending banks will continue to service the loans at an interest rate of 5% per annum instead of 9%.

  • They can also get another year of not needing to pay back the principal sum collection. However, they will need to apply.
  • Whilst this move helps the small businesses continue to manage their cash flow, it means the CBN will record a reduction in its income extended under such facility.
  • Regulatory forbearance is a widely adopted concept during an economic crunch and it is meant to help stimulate businesses. These pronouncements if implemented will only affect those who borrow from the CBN or BOI but those who do not will miss out.
  • Download the circular here.

READ: CBN discloses conditions for assessing N100 billion credit facility, addresses ‘process problems’


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Economy & Politics

Senate endorses ex-Service Chiefs as Non-career Ambassadors

The Senate has confirmed President Buhari’s nomination of the immediate past service chiefs as non-career ambassadors.



The Nigerian Senate has endorsed the nomination of the past serving Military Service Chiefs as Non-career Ambassadors.

This was confirmed during Tuesday’s plenary session and announced in a social media statement by the Nigerian Senate.

Their confirmation follows the consideration of the report of the Senate Committee on Foreign Affairs, Chaired by Senator Adamu Bulkachuwa.

According to reports, the Senate Minority Leader Enyinaya Abaribe, however, questioned the nomination and confirmation of the ex-service chiefs when the Senate had on 3 different occasions called for their sack.

Senator Abaribe also raised issues on the petitions against the former service chiefs and questioned why they were dismissed without explanations.

But Senate President Ahmad Lawan dismissed Senator Abaribe’s concerns, ruling that the nomination of the former service chiefs cannot be nullified simply because the upper chamber had called for their sack, noting that this is totally a different assignment.

In his concluding statement, the Senate President, Senator Lawan added that these nominees that have just been confirmed have served this country to the best of their abilities. He appealed to the executive to make sure they use their experience as military men to the best.

“These nominees that we have just confirmed are nominees that have served this country to the best of their ability. Our appeal to the Executive is to make sure they use their experiences as military men to the best,” Lawan said.

Lawan, on behalf of the senate, wished them a very successful career in their capacity as Non-Career Ambassadors.

What you should know 

  • Recall Nairametrics reported earlier this month that President Muhammadu Buhari nominated ex-Service Chiefs for Senate approval as non-career Ambassadors-Designate.
  • Their appointment came barely a week after their retirement as service chiefs and their replacement with new ones.
  • This led to a spate of criticisms from some Nigerians who felt that the nation’s security situation got worse under their watch.
  • They were reported to have tendered their resignation from their positions amid heightened calls that they should be sacked due to the increasing rate of insecurity across the country.

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