The recent Gross Domestic Product (GDP) report released by the Nigerian Bureau of Statistics (NBS) has revealed that the real GDP of the manufacturing sector contracted by -2.75% in 2020.
This signals the end of a two-year run of real growth in the sector.
The contraction in the real GDP of the Manufacturing sector, leaves the sector in a vulnerable position, noting that the sector according to NBS computation grew by 0.77% in 2019 and 2.09% in 2018.
It is essential to understand that in nominal terms, without factoring in the change in prices in 2020, the Nominal GDP of the sector recorded a growth rate of 16.44% at the end of the year, compared to 34.73% in 2019.
- At the end of the fourth quarter of 2020: the manufacturing sector’s Real GDP contracted by –1.51% (year-on-year). This is lower than the corresponding quarter of 2019 and the preceding quarter by –2.75% points and –0.01% points respectively.
- The growth rate of the sector, on a quarter-on-quarter basis, stood at 5.60%.
- However, in nominal terms, the sector’s GDP growth at the end of the fourth quarter of 2020 was recorded at 24.60% (year-on-year), this is -1.69% points lower than 26.29% recorded in the corresponding period of 2019 but 11.06% points higher than the preceding quarter (13.54%).
- In nominal terms, quarter on quarter growth of the sector was recorded at 5.78%
- The Real contribution of the sector to the Nation’s GDP in the fourth quarter of 2020 was 8.60%, which is lower than the 8.74% recorded in the fourth quarter of 2019 and the 8.93% recorded in the third quarter of 2020.
- At the end of 2020, the annual contribution of the Manufacturing sector to Nigeria’s GDP stood at 8.99%.
What you should know
The Manufacturing sector is comprised of thirteen activities: Oil Refining; Cement; Food, Beverages and Tobacco; Textile, Apparel, and Footwear; Wood and Wood Products; Pulp Paper and Paper products; Chemical and Pharmaceutical products; Non-metallic Products, Plastic and Rubber products; Electrical and Electronic, Basic Metal and Iron and Steel; Motor Vehicles and Assembly; and Other Manufacturing.
CBN tasks multinationals on domestic production as P&G signs $35m deal to produce Oral-B locally
The CBN Governor has called on multinationals operating in the country to work towards the production of their goods in Nigeria.
The Central Bank of Nigeria, as part of its agenda to strengthen the manufacturing sector, has tasked multinational manufacturing companies in the country to consider setting up their manufacturing lines in Nigeria.
Godwin Emefiele, the CBN Governor made this statement during the contract signing ceremony between Procter & Gamble (P&G) and Colori Cosmetics Nigeria in Lagos.
The contract which is a move towards stimulating localization of production was birth from CBN’s policy-driven efforts to encourage improved production of goods that can be produced locally.
The Governor of Nigeria’s apex bank who was the host at the contract signing ceremony encouraged other multinational firms to consider the opportunities that Nigeria offers and begin to set up their manufacturing lines in Nigeria, noting that this move will help in creating jobs and wealth for the growing population.
Emefiele who also spoke on the economic stabilization policies implemented by the CBN to set Nigeria on the path of recovery explained that the manufacturing sector will continue to be a key focus of the efforts by the monetary and fiscal authorities towards driving the recovery of the Nigerian economy.
Why this matters
- The investment deal which is worth $35 million is set to present the well-diversified consumer goods giant with the opportunity to commence the domestic production of Oral-B toothpaste in Nigeria.
- The contract between P&G and Colori Cosmetics Nigeria will facilitate the local production of Oral-B products by P&G in Nigeria, as part of the commitment by the CBN to strengthen the manufacturing sector.
- This move is expected to make Nigeria a competitive producer of the product, and also cut the importation of toothpaste from the US, where P&G is based.
BUA Cement to commission second Kalambaina Cement Line in July 2021
BUA’s 3 million metric tpa cement line is set to be launched in July this year to help increase supply and stabilize prices of cement.
The second Kalambaina Cement Line of 3 million MTPA in Sokoto State, owned by one of the leading Cement manufacturing company, BUA Cement Plc, looks set to be commissioned in July this year.
In line with BUA Cement’s strategic midterm expansion programme, the cement plant will help to effectively scale up cement production, with the look to meet current and projected demand, as the Nigerian market is still greatly underserved.
Images of the plant surfaced on social media platform -Twitter- suggesting that the official launching of the plant could be imminent.
Why this matters
- The cement line when commissioned will add to the robust infrastructure of the cement tiger, and expand its installed capacity from 8 million MTPA to 11 million MTPA.
- This should help in cementing BUA’s position as the second-largest cement producer in terms of installed capacity, ahead of Lafarge Africa with 10.5 million MTPA capacity.
- This move will also help to unlock Pan-African opportunities for the company across the African Continent.
What you should know
- Recall that the billionaire, Abdul Samad Rabiu, the founder of the BUA Group revealed in his statement at 2020 Institute of Directors Dinner, that BUA’s cement line of 3mmt per annum in Sokoto is expected to be commissioned in the middle of 2021.
- BUA has also signed a contract with the Chinese construction company, Sinoma CBMI, for the construction of additional three production lines, with an installed capacity of 3 million metric tonnes per annum each.
- According to Abdul Samad Rabiu, the 3 cement plants in Sokoto, Edo and Adamawa which will be constructed at the cost of $1.050billion, will be completed by the end of 2022.
- When completed, the total installed capacity of BUA Cement is expected to expand to 20 million MTPA.
BUA Cement at the moment is the third most capitalized company on the Nigerian Stock Exchange with a market capitalization in excess of N2.5 trillion behind MTN and Dangote cement.
Nairametrics | Company Earnings
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- Seplat falls into a loss in FY 2020
- 2020 FY Results: Cornerstone Insurance Plc reports a 61.1% decline in profit
- Ellah Lakes increases operating expenses by 33.36% in HY 2020
- 2020 FY Results: Nigerian Breweries reports a 54.3% decline in profits in 2020
- Abbey Mortgage Bank projects N51.08 million profit in Q2 2020.