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Released Q3 Manufacturers’ CEOs Confidence Index show stifling productivity
Contrary to claims of the Central Bank of Nigeria (CBN), latest released Nigerian Manufacturers’ CEOs Confidence Index for the third quarter of 2019, has indicated lending rates by commercial banks have remained at double digits.
The report also showed that many members of the Manufacturers Association of Nigeria (MAN) still source forex from black market upon the momentary forex intervention of the apex bank.
According to the report, both factors have continued to derail targeted growth in local productivity within the period under review.
Business Hilights gathered that the index was created by MAN to gauge the pulse of the economic drivers on a quarterly basis.
The report made it clear that Nigerian manufacturers are still under the whims and caprices of multiple taxes by the three tiers of government and poor size of loans offered to the manufacturing sector.
In a pool result contained in the report, over 70% of companies’ CEOs are of the view that the rate at which the sector sourced foreign exchange had improved.
“While 15 per cent agreed that the sector’s foreign exchange sourcing had improved, the other 15 per cent were not sure that forex had improved.
“Majority of the manufacturers resorted to the parallel market to source forex to purchase machines and raw materials among other inputs needed for production.
In parts, the report averred that “The response further confirmed that much has not changed in the supply of forex to the industry for purchase of machines, raw materials and other manufacturing input that are currently not available in the country.
“At the moment, most manufacturers’ source forex only at the parallel market at unfavourable exchange rate, making manufacturing import bills for raw materials and machinery that are not locally available unnecessarily high.”
Another critical revelation of the report is that “82 per cent of the CEOs interviewed disagreed that the rate at which commercial banks lent to manufacturing sector within the period under review encouraged productivity in the sector.
“This is evident in the double- digits cost of borrowing from the commercial banks, even amidst measures by the monetary authority to reduce cost of borrowing in the country.
“This to a large extent discourages investment particularly in the manufacturing sector, Q3 Manufacturers’ CEOs Confidence Index averred.