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How backward integration by manufacturers boosted job creation—MAN Report

A new report released by the Manufacturers Association of Nigeria (MAN) has revealed that forex crisis-driven backward integration in sourcing of raw materials in 2017 has created more jobs year-on-year.

The report averred that figures from the various surveys conducted by MAN equally indicated that at the end of 2017, an estimated 1,649,612 historical cumulative jobs were created in the manufacturing sector as a total of 10,257 manufacturing jobs were created in the second half of 2017 as against 10,061 jobs created in the corresponding half of 2016.

On sector details, the report noted that the Food, Beverage and Tobacco sectoral group accounted for most of the jobs created with 3,994 in the second half of 2017.

Besides, whereas the manufacturing sector had seen recovery and minimal growth following the recession of 2016, aided mostly by government policies that relaxed foreign exchange restrictions and sought to make the operating environment more conducive, the creative idea by several manufacturing groups in sourcing raw materials in-country assisted in creating more jobs and cutting down capital flights.

The report noted that output in the sector had grown from -2.54 per cent in the fourth quarter of 2016 to 0.14 per cent in the fourth quarter of 2017, thus indicating 2.68 percentage points increase over the period under review.

This stemmed from the observation that the implementation of resource-based industrialization and backward integration policy (BIP) as contained in Nigeria’s Industrial Revolution Plan (NIRP) as well as proactive measures to avert foreign exchange exposure risks has pushed local sourcing of raw materials to 65.7 per cent.

Otherwise, local raw-material utilisation increased to 65.70 percent in 2017 from 59.98 percent recorded in the corresponding half of 2016; thereby indicating 5.71 percentage point increase over the period.

The Central Bank of Nigeria (CBN) had in 2015, restricted 41 items, including plastic and rubber products, vegetable oil, cosmetics, poultry products, roofing sheets, wheelbarrows, toothpicks, among others, from accessing foreign exchange from the interbank foreign exchange market as a measure to drive local sourcing and production.

Though local raw-materials utilisation was on the increase across the sectors, Non-Metallic Mineral Products sectoral group recorded the highest utilisation level at 70.5 percent as against 60.08 percent recorded in 2016; thereby indicating 10.4 percentage point increase over the period. In the Woods & Wood Products sector, local raw-material utilization increased to 70.1 percent from 58.75 percent recorded in the corresponding half of 2016; thereby indicating 11.35 percentage point increase over the period.

It also increased by 1.49 percentage point when compared with 68.6 percent recorded in the preceding half.

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