Nigeria's manufacturers see slow positive growth

A recent report by the Manufacturers Association of Nigeria (MAN) has shed light on the current state of economic activities in the country, providing a hopeful outlook for the manufacturing sector. According to MAN's fourth-quarter CEO Confidence Report, there has been a gradual but positive growth in Nigeria's economy, boosting the confidence of manufacturers across the nation. Ambrose Ruchie, the Director of Corporate Services Division at MAN, discussed the findings of the report in a recent interview with CNBC Africa, highlighting some key insights. One of the bright spots revealed in the report is the increase in confidence among manufacturers regarding the business conditions for the upcoming months. The survey conducted by MAN showed a 3.2-point increase in optimism among the 400 members surveyed, indicating a belief that government policies geared towards business-friendly initiatives could drive growth in the first quarter of 2022. While challenges such as the lingering impact of the COVID-19 pandemic, supply chain constraints, and security issues still pose concerns, manufacturers are cautiously optimistic about the future. In addition to the positive sentiment regarding future business conditions, manufacturers also expressed confidence in a potential uptick in employment levels in the first quarter of 2022. This optimism reflects a belief among survey respondents that an improvement in the overall business environment could lead to increased job opportunities within the sector. These insights provide a glimmer of hope amid the ongoing challenges faced by manufacturers in Nigeria. The issue of foreign exchange (Forex) also emerged as a significant concern for manufacturers, given their reliance on imported raw materials and equipment. While the report noted that there had been no remarkable changes in the Forex situation in the fourth quarter, there is a sense of optimism regarding the outlook for the broader economy. The recent assurance from the Central Bank of Nigeria (CBN) regarding a sectoral allocation of Forex has bolstered confidence among manufacturers who anticipate benefiting from this initiative. Despite the challenges posed by Forex volatility, as well as issues like insecurity and transportation constraints, manufacturers remain hopeful that the sectoral allocation of Forex will address some of these concerns and support their operations. The potential impact of this initiative on the manufacturing sector is a source of encouragement for industry stakeholders as they navigate the complexities of doing business in Nigeria. When it comes to taxation, concerns were raised about the government's efforts to increase the tax-to-GDP ratio, which may result in higher tax obligations for businesses, including manufacturers. Ambrose Ruchie emphasized the importance of expanding the tax net to include more taxpayers rather than burdening existing companies with additional taxes. He highlighted the need for transparency and effective utilization of tax revenues to ensure compliance and willingness among taxpayers to contribute more. Ruchie noted that incentivizing tax compliance through measures such as reducing the tax collection agency's share of collected taxes could encourage greater participation in the tax net. By incorporating more individuals and businesses into the tax system and fostering a culture of transparency and accountability, the government can enhance tax revenues without stifling business growth. In light of the challenges posed by inadequate data collection and the need for accurate assessments of tax revenue to GDP ratios, there is a call for improved data transparency and collection methodologies to gain a clearer understanding of Nigeria's tax landscape. Addressing these crucial issues will be vital in shaping effective policies and strategies to drive sustainable economic growth and support the development of the manufacturing sector in Nigeria. Overall, the MAN report points to a gradual but promising trajectory for Nigeria's manufacturers, with increased confidence and cautious optimism prevailing amidst economic challenges. As stakeholders collaborate to address key issues such as Forex volatility, taxation policies, and data transparency, there is potential for sustained growth and resilience in the manufacturing industry, contributing to the broader economic recovery of the country.