As global economy continue to face uncertainty, the Manufacturers Association of Nigeria (MAN) Chief Executive Officers (CEO’s) confidence index on the Nigeria economy declined by 1.5 points from 55.4 points in fourth quarter of 2021 to 53.9 point in first quarter of 2022.
Although, according to the report which was made available to Financial Edge, on the overall, the score suggests fairly stable confidence in the economy driven primarily by improvement in current business condition.
Highlights of the reports shows that the performance was affected by declining employment and production conditions arising from familiar supply-side constraints. Some other factors that contributed to the drop includes eroding disposable income of consumers, high interest rate, excessive drive for revenue by government, obvious neglect of the economy for politics.
The persistent acute shortage of foreign exchange, insecurity, the immediate impact of Russian invasion of Ukraine as seen in the hike in price of Diesel, wheat and other imported manufacturing inputs, was noted as reasons behind the low score in 2022 first quarter.
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 for the association. This according to MAN, 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.
However, 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 first quarter of 2022. Index score of Wood & Wood Products sectoral was (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.
Also analysis based on industrials zones 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.
The manufacturers CEO’s confidence index (MCCI) is a quarterly research and advocacy publication of the Manufacturers Association of Nigeria (MAN), which measures changes in pulse of operators and trends in the manufacturing sector quarterly, in response to movements in the macroeconomy and government policies using primary data mined through direct survey on over 400 Chief Executive Officers of MAN members companies.
The standard diffusion factors deployed in the MCCI analytic processes include the current business condition, business condition for the next three months, current employment condition, rate of employment and condition for the next three months and production level for the next three months.
The MAN MCCI has a baseline index of 50 points that suggests a stationary point in the economy and affairms the level of confidence and performance in the quarter under review. Points above 50 points indicates that manufacturers have confidence in the economy and improvement in manufacturing performance, while any index point below 50 points indicate otherwise.
