Local producers have expressed concerns about the pace of economic recovery as manufacturing sector’s Purchasing Managers’ Index (PMI) for the month of September stood at 46.9 index points, indicating contraction in the sector for the fifth time.
According to the Central Bank of Nigeria (CBN), manufacturing PMI for September slipped from August 48.5 points, while the non-Manufacturing PMI stood at 41.9 points from 44.7 points. Supplier delivery time grew faster (53.5 vs. 53.0 points in August), production level lower (47.3 vs. 49.2 points in August), new orders also slowed down (46.4 vs. 49.2 points in August), employment level dropped (44.1 vs. 44.6 points in August), and raw materials inventories (43.0 vs. 46.1 in August) continued to contract.
The weak PMI indicates a slowing in the pace of economic recovery even as the rate of COVID-19 infections declines, and restrictions are eased.
Analysts say that activities are expected to remain under pressure amidst weak household consumption, rising inflation, and forex exchange weakness and illiquidity.
To analysts at Cordros Securities, the PMI remained in contractionary territory for the fifth consecutive month, as weak consumer spending, low level of business activities, and high cost of procurement brought about by currency weakness and limited access to foreign exchange, continued to dampen Nigeria’s macroeconomic environment.
Of the 14 subsectors surveyed, only four reported expansion (above 50% threshold) in the review month in the following order: electrical equipment; transportation equipment; cement and non-metallic mineral products.
The remaining subsectors reported contractions in the following order: petroleum & coal products; primary metal; furniture & related products; printing & related support activities; food, beverage & tobacco products; textile, apparel, leather & footwear; chemical & pharmaceutical products; fabricated metal products and plastics & rubber products; while paper product subsector was stable.
To reverse the trend the Manufacturers Association of Nigeria (MAN), urged the government to initiate policies that will strengthen the purchasing power of consumers to stimulate aggregate demand and deliberately support industries to reduce the production cost of manufactured products in the country.
According to the President of MAN, Mansur Ahmed, the outcomes of the pandemic led to a lockdown, near shut down of the operations of eight manufacturing sectoral groups, disruption in supply chain, and inventory of unsold items and loss of jobs.
“The CBN should also grant manufacturers increased access to Foreign Exchange at pre COVID-19 rate to support the importation of raw materials, machines and spares that are not available locally.
“Introduce fiscal measures by waiving import duties on Active Pharmaceutical Ingredients (APIs), other essential products and food related raw materials for one-year effective April 2020; Extend timelines for filing and paying taxes (including excise duty with a provision that it should be based on sales and not production) by 6 months after the economy returns to normalcy,” MAN added.
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