Recession, others shrink manufacturing sector’s stake to GDP by N80bn in 2016—NBS
Fresh report from the National Bureau of Statistics (NBS) has shown that the manufacturing sector’s contribution to the economy dropped from N8.97tn as of the end of December 2015 to N8.89tn as of the end of December 2016.
Before now, sector observers has said that the scarcity of foreign exchange added to the harsh ease of doing business and multiple taxation jointly frustrated performance of manufacturing companies which translated to drop in the contributions to the Gross Domestic Product (GDP) in 2016.
Analysts say the trend is becoming worst this year as there had been no clear ease in the challenges that hobbled industrial output in 2016
Already, many chief financial officers of business organisations in Nigerian have confessed that they are not confident about economic and business growth in 2017, meaning that contribution of the real sector to the GDP may shrink further within this year.
Speaking at a press conference weekend, a Partner and Head, Audit services, KPMG in Nigeria, Tola Adeyemi, said their views were contained in the 2017 KPMG CFO report which summarily indicate that the major manufacturing challenges in 2016 which included unavailable foreign exchange, its volatile rates as well as weak infrastructure are getting unbearable even this year.
He said “The number one thing keeping the CFOs awake is non-availability as well as the fluctuation in the exchange rate. After that, they said they were facing a number of operational challenges, caused by the weak state of infrastructure in Nigeria.
“The message from this outlook, which we will be passing on to the government is that from 2017, the CFOs have all agreed that it will be a difficult year but there is confidence that things will improve beyond that. The key thing the government should do is to put some measures in place to help to sustain that confidence. The foreign exchange availability and volatility has got to be a priority for the government.”
Business Hilights gathered that there are about 13 sub-sectors that constitute the manufacturing sector and nine of them recorded increase in economic performance while only four recorded decrease in productivity.
The nine sub-sectors with increase in economic performance are oil and refining, which rose from N248.02bn in 2015 to N276.59bn; textile apparel and footwear, which increased from N1.87tn to N2.02tn; and wood and wood products from N259.35bn to N275.1bn.
Others are pulps and paper products from N66.09bn to N70.7bn; chemical and pharmaceuticals products from N190.12bn to N197.7bn; non-metallic products from N315.59bn to N344bn; plastic and rubber products from N267.16bn to N291.4bn.
Others are electrical and electronics from N6.02bn to N6.19bn; basic metal, iron and steel from N207.3bn to N219.57bn.
However, the four sub-sectors that recorded some decline in economic activities, according to the NBS report, are cement, dropping from N749.93bn in 2015 to N649.6bn in 2016; food, beverages and tobacco, from N4.29tn to N4.1tn; motor vehicle and assembly from N70.05bn to N52.79bn and other manufacturing from N431.1bn to N390.7bn.
Details of the PWC report said in parts: “For full year 2016, the manufacturing sector in real terms contracted by 4.32 per cent, compared to a decline of 1.46 per cent recorded in 2015.
“This reflects a number of challenges faced by manufacturing in 2016, such as higher costs of imported inputs as a result of the exchange rate; and higher energy costs as a result of a fall in electricity generation, and more expensive fuel.
“Real GDP growth in manufacturing remained negative in Q4 2016: a contraction of 2.54 per cent was recorded (year-on-year). This was an improvement relative to the decline of 4.38 per cent recorded in the third quarter, but low relative to the growth of 0.38 per cent recorded in the fourth quarter of 2015.
“Just four of the 13 activities under the manufacturing recorded growth in Q4 2016, compared to three in Q3 2016. Seven of the activities, nevertheless, performed better than in Q3 2016. On a quarter-on-quarter basis, the sector grew by 1.89 per cent, the report summed”.
