Manufacturers CEO Q1 Confidence Index falls to 53.9 points

The first quarter of the year has brought troubling news for the manufacturing sector in Nigeria, as the manufacturer's CEO confidence index fell by 1.5 points to 53.9 points. This decline has been attributed to various factors such as eroding disposable income of Nigerian consumers, high interest rates, revenue drive by the government, and the immediate impact of the Russian invasion of Ukraine. Segun Ajayi-Kadir, the Director General of the Manufacturers Association of Nigeria, recently spoke with CNBC Africa to dissect the implications of this report. Ajayi-Kadir shed light on the key indicators that the CEO confidence index tracks, including current business conditions, employment conditions, and production levels. According to him, the environment looks challenging, with a notable dip in the index from 55.4% to 53.9%. The impact of foreign exchange volatility, electricity supply issues, and scarcity of diesel has been particularly concerning for manufacturers in Nigeria. The collapse of the national grid multiple times in the first quarter has hampered production capacity, while the decrease in disposable income has affected sales. Apart from the existing challenges like forex fluctuations, port congestion, high-interest rates, and excessive taxation, new hurdles stemming from the Russia-Ukraine crisis have added pressure on the manufacturing sector in Nigeria. Ajayi-Kadir emphasized the resilience of the sector but expressed concerns about its ability to withstand the additional shocks. The war has disrupted the supply of raw materials and machineries, making it difficult for manufacturers to operate efficiently. The Director General highlighted the urgency for strategic interventions to support the sector and prevent further decline. He urged the government to prioritize forex allocation for manufacturers, address electricity supply challenges, and eliminate barriers to accessing power. Additionally, he called for a review of decisions leading to increased excise duties, which could impact consumer purchasing power negatively. Measures to improve port infrastructure and eliminate gridlock were also recommended to facilitate trade and reduce costs for manufacturers. As the Manufacturers Association of Nigeria prepares to submit advocacy submissions to the federal government, their focus remains on these critical issues that are impeding the growth of the manufacturing sector. Ajayi-Kadir's insights point towards a pressing need for proactive measures to alleviate the challenges faced by manufacturers and ensure a more conducive operating environment. The upcoming deliberations with policymakers offer a pivotal opportunity to address these concerns and potentially steer the sector towards recovery and growth. Amidst the uncertainties and constraints plaguing the manufacturing landscape, industry stakeholders are hopeful for constructive dialogue and concrete actions that can bolster the resilience of the sector and pave the way for sustainable progress.