The Manufacturers Association of Nigeria (MAN) has projected a tough start to 2024 for the manufacturing sector but expects improvements towards the third quarter.
The Director General of the group Mr. Segun Ajayi-Kadir stated this during an interview with the News Agency of Nigeria (NAN) on the outlook for the sector in 2024.
According to him, the upcoming year is anticipated to be challenging, with a potential for a subtle recovery starting in the third quarter.
He explained that the prospect of recovery relies heavily on implementing policy stimuli and a synthesis of domestic growth through export-focused and offensive trade strategies. This approach is expected to enhance resilience, foster steady growth, and ensure the sector gains significant traction in the latter part of the year.
He noted that growth for the sector may hit 3.2% while the contribution to the Gross Domestic Product (GDP) is expected to reach 10% this year.
He stated,
- “In broad terms, the year 2024 may start on a tough note for manufacturing but may end with some measured improvements because the envisaged policy reforms, improved commitment to domestic production and general positive outlook seem favourable for the sector,”
- “In 2024, sectoral real growth is expected to hit about 3.2%; contribution to the economy will most likely exceed 10% and the Manufacturers’ CEOs Confidence Index is predicted to rise above 55 points threshold by the end of Q4 2023.”
Speaking further, Mr Ajayi noted that foreign exchange problems and inflation coupled with challenges with interest rates will curtail capacity utilization for the sector’s output. However, he expects the effects of these challenges to subside from the third quarter.
Concessions, oil prices, local petrol refining to impact manufacturing in 2024
He mentioned that the current concessions involving seaports, airports, and roads could offer opportunities for the cement sub-sector, contributing to necessary infrastructure upgrades for improved manufacturing productivity.
Furthermore, he highlighted that the potential rise in global oil prices, increased domestic oil and gas production, local petroleum product refining, and anticipated gains from exchange rate unification would collectively foster stability in the foreign exchange market.
What You Should Know
- The manufacturing sector has been grappling with diverse problems in recent years leading to notable exits. These problems include; rising foreign exchange rates, high energy costs occasioned by epileptic power supply, multiple taxation, inflation, etc.
- However, these problems became more pronounced in 2023 with the removal of fuel subsidies and the unification of the foreign exchange market. The Chairperson of the Export Promotion Group within the Manufacturers Association of Nigeria (MAN), Oddiri Erewa-Meggison stated in October that the current economic situation was the worst in the nation’s history for manufacturers.
- To stimulate growth, the President has promised an N75 billion credit to manufacturers at a 9% interest rate.