…The Aggregate MCCI score declined to 53.9 points in Q1 2022 from 55.4 points recorded in Q4 2021.
The Manufacturers CEO’s Confidence Index, MCCI, First Quarter, 2022 report shows shows that the ongoing invasion of Ukraine will continue to have negative spiral effects on every sector of the economy if not halted as soon as possible. The implication of allowing the invasion to continue for the manufacturing sector will include enormous decrease in capacity utilization (as factories begin to experience stock-out situations), inflation, dwindling sales, lower productivity, unemployment and heightened insecurity. Certainly, all of these would also have severe implications for economic and social wellbeing of over 200 million Nigerians.
The findings was released in the Manufacturers CEO’s Confidence Index, MCCI, of the Manufacturers Association of Nigeria, MAN, first quarter 2022 report which was sent to Energy Frontier on Thursday Evening.
In recapitulation, available facts and recent experiences have shown that the emergence of a challenge in one country can became a major constraint with spiral effects for the entire world. The learning curves from recent development include the need for leaders all over the world to jointly manage global peace and deepen the cord of interdependence of countries along the line of development priorities of nations and the obvious reality that when disruption occurs in any part of the global economy, only countries with automatic stabilizers and strong internal economic mechanisms will be able to respond appropriately.
The trend observed in the first quarter 2022 MCCI resonates with a priori expectations, the oscillatory trajectory of the macroeconomy and fluctuating manufacturing performances observed in the last two years. In fact, the performance recorded is largely similar but with slight differing magnitude when compared with what was obtained in the last quarter of 2021. Clearly, the prevalence of familiar binding constraints to the steady growth of the manufacturing sector, the reverse effects of COVID-19 pandemic and the food shortages, rising inflation, foreign exchange parity, economic uncertainty, general increase in price of petroleum products, supply chain disruptions and the growing concern of future increase in the prices of wheat and fertilizer manufacturing inputs occasioned by the Russian invasion of Ukraine are contributory factors that impacted the aggregate MCCI.
“Although the first quarter 2022 MCCI index score of 53.9 points fell below that of the last quarter 2021, the overall result shows that even though the economy recorded positive improvement despite unstable macroeconomic fundamentals, the manufacturing sector is still largely under severe pressure, its health very well in the fringes and below the desired performance threshold. In addition, feedbacks from manufacturers identified Limited supply of electricity; High cost of local and imported raw-materials; Persisting acute shortage of forex for importation of machine, raw materials not available locally and persisting insecurity in the country as the first our out of the challenges limiting the performance of the manufacturing sector in the period under review. As customary, MAN will include findings in the advocacy submissions to the Government backed with detailed recommendations on measures to address identified challenges inhibiting scale and competitive production in the sector”, stated the report.
“Undoubtedly, the precarious situation that the manufacturing sector is currently in and the looming dangers ahead calls for a National Response and Sustainability Strategy to guarantee the survival of sector and avoid further de-industrialization”, the report added.
Analysis based on Industrials zones according to the report shows that out of the 13 Industrial Zones in Nigeria, Bauchi/Benue/Plateau, Abuja and Rivers struggled in the First Quarter of 2022. The performance of the afore-mentioned zones were clearly depicted by the Index scores of 48.3, 44.8 and 46.0 points respectively, in the period under review which fell below the 50 neutral points threshold Index score.
“In broad terms, the lackluster performance recorded in Bauchi/Benue/Plateau, Abuja and Rivers industrial zones is attributed to the unbridled disruption of manufacturing activities by high level insecurity, rising operating cost and the general manufacturing unfriendly environment. In specific terms, peculiar contributory factors for Rivers State include the prevailing low interest in the productive sector evidenced by shrinking industrial landscape, low support for the manufacturing sector and the overly concentration on trade and services.
“Findings from Sectoral analysis shows that operations of manufacturing concerns in the Wood & Wood Products, Electrical & Electronics and Motor Vehicle & Miscellaneous Assembly groups were heavily challenged in the Q1 2022”.
“Index Score of Wood & Wood Products sectoral (48.9 points); Electrical & Electronics (49.9 points); and Motor Vehicle & Miscellaneous Assembly (49.2 points) were all below the 50 base points. Affirming low confidence in the economy, poor performance and the struggling status of these manufacturing sectoral groups”.
“The Aggregate MCCI score declined to 53.9 points in Q1 2022 from 55.4 points recorded in Q4 2021. Although, on the overall, the score suggests fairly stable confidence in the economy driven primarily by improvement in current business condition. Although the performance was affected by declining employment and production conditions arising from familiar supply-side constraints. The general decline in the index point and the dimmed outlook for the second quarter evidenced by expectations of lower production, employment and unfriendly business condition, is a cause for concern. This obviously calls for the crafting of a National Response and Sustainability Strategic Plan to avert the looming economic crisis and shortages that would arise from the impact of the Russia invasion of Ukraine”.