The Manufacturers Association of Nigeria (MAN) has bemoaned the upsurge in the cost of production, which it said was affecting its output rate.
It noted that the rising price in diesel, raw materials, imports, high interest rate, forex shortage and inflation among others were reducing its production capacity.
In its CEOs Confidence Index (MCCI) presentation for the first quarter which measures changes in the pulse of operators, the association noted that the index declined to 53.9 points from 55.4 points in the fourth quarter of 2021.
“Contributory factors to the decline in the index score for the first quarter of 2022 include eroding disposable income of consumers, the immediate impact of the Russian invasion of Ukraine as seen in the hike in price of diesel, wheat and other imported manufacturing inputs, the persistent acute shortage of forex, insecurity, high interest rate, excessive drive for revenue by government,” MAN said.
“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 out of the challenges limiting the performance of the manufacturing sector in the period under review.”
Operators are worried that inflation, which accelerated to 15.9 per cent in March, could increase further if the Ukraine -Russia conflict prolong’s disruptions.
The association said the outlook for the second quarter had been dimmed as the Russia-Ukraine crisis had shown no sign of abating.
“The implication of prolonged invasion for the manufacturing sector will include enormous decrease in capacity utilisation (as factories begin to experience stock-out situations), inflation, dwindling sales, lower productivity, unemployment and heightened insecurity,” MAN said.
Inadequate supply sufficient electricity is leaving manufacturers at the mercy of alternative energy sources such as the use of petrol and diesel.
MAN therefore called 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.”
