The Manufacturers Association of Nigeria (MAN) has noted that the delay in the commencement of operations at the Ajaokuta Steel Company and the Aluminum Smelter Company affected the confidence level of operators in Nigeria’s iron, metal, and steel industry in the last quarter of 2024.
This was stated in the Q4 2024 report of the Manufacturers CEO Confidence Index report released by the Manufacturers Association of Nigeria (MAN).
According to the report, the Basic Metal, Iron & Steel sub-sector recorded diminished confidence indices, dropping from 58 points in Q3 2024 to 57 in Q4 2024.
The report blames this contraction on the delay in the takeoff of the Ajaokuta steel company,y which caused local metal and steel operators to depend on imports.
“The prolonged delay in the take-off of these key industrial projects has left operators in the Basic Metal, Iron & Steel Sectoral Group heavily reliant on imported metallic materials, making them highly vulnerable to the adverse effects of foreign exchange volatility,” the report read.
The report also highlighted challenges within the Electrical & Electronics Sectoral Group, noting that a continuous decline in consumers’ real income and frequent hikes in electricity tariffs have led to reduced patronage of household electrical appliances.
The confidence level of the Electrical & Electronics Sectoral Group also dipped from 52.5 points in Q3 2024 to 51.3 points in Q4 2024.
The Non-Metallic Sectoral Group also recorded a decline in confidence level due to macroeconomic factors such as rising energy costs and forex losses, among others. The subsector recorded a confidence index of 50.2 in Q4 2024, dropping from 57.6 points in Q3 2024.
“Despite the increasing number of large-scale infrastructure projects in the public sector, the confidence of operators within the Non-Metallic Sectoral Group was dampened by the rising energy cost, huge Forex losses, the expiration of pioneer tax incentives across multiple cement plants, and the renewed enforcement of the ban on tinted vehicle glasses,” the report notes.
High confidence levels in Plastic & Rubber, Wood sectors, others
The MCCI report shows that other subsectors recorded high confidence indices in the last quarter. The Domestic/Industrial Plastic & Rubber and the Wood & Wood Products subsectors recorded a remarkable rise in the confidence levels of operators.
- The operators in the Domestic/Industrial Plastic & Rubber Sectoral Group experienced an increase of 3.3 points in confidence level from 48 points in Q3 2024 to 51.3 points in Q4 2024.
- The report attributed this rise to the growing number of recycling hubs in the country.
- The rising increase of recycling hubs is contributing largely to cost-efficient production in the (Domestic/Industrial Plastic & Rubber) Sectoral Group despite the Forex constraint.
- The confidence index of the Wood & Wood Products Sectoral Group moved up by 3.2 points from 48 points in Q3 2024 to 51.2 points in Q4 2024.
“The rising furniture demand in the real estate sector and the lifting of the export ban on processed wood were major factors responsible for the improved confidence in the Sectoral Group. The export of processed wood to Europe and Asia has particularly been on the rise since the ban lift,” the report read.
Other sectors that recorded an increase in confidence levels of operators include:
- Pulp, Paper, Paper Product, Printing, Publishing & Packaging (52.9). It moved by 1.4 points from 51.5 points in Q3 2024. According to the report, this can be attributed to a rise in digitalization and self-publishing models.
- Chemicals & Pharmaceuticals scored 50.8 points, a marginal increase of 0.3 points in the confidence index from 50.5 points in Q3 2024. The positive performance was attributed to stability in drug prices and the gradual expansion of local production.
- Food, Beverages & Tobacco scored 50.3 points, an increase of 2.8 points in the confidence index from 47.5 points in Q3 2024. This was attributed to the boom in Tourism and Entertainment Sectors during the Yultide season, which operators in the Food, Beverage, & Tobacco group benefitted from
- Textile, Apparel & Footwear scored 46.8 points, moving up from 44 points in Q3 2024. “However, the confidence index of the Sectoral Group remained below the 50-point benchmark due to the persistent smuggling of foreign materials, heavy influx of imported textile products, and low patronage by Government MDAs,” the report notes.
- The Motor Vehicle & Miscellaneous Assembly scored 44.8, also below the 50-point benchmark but slightly above the 44.0 points it scored in Q3 2024.
