Manufactured goods imports into the country rose
significantly in the third quarter of last year as the manufacturing sector was
hard hit by the COVID-19 disruptions, border closure and foreign exchange
scarcity.
The sector contracted in the six months to October amid the
economic fallout of the pandemic.
Although it snapped out of the doldrums in November, the
sector shrank again in December, according to the Central Bank of Nigeria’s
Purchasing Managers’ Index Survey Report.
The manufactured goods imported into the country in Q3 were
valued at N3.83tn, up from N2.78tn in Q2 and N2.66tn in Q1, according to the
NBS.
Manufactured goods imports increased in value by 23.18 per
cent in Q3 compared to Q2 and 23.47 per cent year-on-year.
The Director-General, Manufacturers Association of Nigeria,
Mr Segun Ajayi-Kadir, said this week that 2020 was quite a bad year for
manufacturing business in Nigeria.
He said the disruption caused by the COVID-19 lockdown and
the challenge of insecurity severely limited food production and movement of
food across the country.
The Lagos Chamber of Commerce and Industry, in its economic
review for 2020 and outlook for 2021, noted that the manufacturing sector was
faced with several structural challenges, with adverse impact on growth
performance.
It said the sector had been struggling with growth in recent
years due to tough operating conditions in the local business environment and
had made most industry players less competitive in the domestic and regional
markets.
According to the LCCI, lingering forex crisis was perhaps
the most significant challenge for the sector in 2020 as most industry players
found it increasingly difficult to access forex meant for importation of
critical factor inputs.
It said the reopening of the land borders should provide
succour to the manufacturing sector ‘even as the kick-off of African
Continental Free Trade Area serves as avenue for manufacturers to penetrate new
African markets’.
“However, critical challenges such as forex scarcity,
inconsistent forex policies, inefficient transport infrastructure, high
production cost, weak consumer demand and the new competitiveness pressure
foisted by the AfCFTA may dampen the recovery prospects of the sector in year
2021,” the group said.
According to the LCCI, the low interest environment in the
money market favours big manufacturing players in terms of raising cheap
capital but the business environment will remain challenging for manufacturing
small and medium enterprises.
It said, “In our view, credit flows to the manufacturing
sector will fail to achieve desired outcomes without putting in place measures
to address structural bottlenecks in the ports and customs processes and other
policy challenges to productivity.
“Thus, we see growth of the manufacturing sector being
subdued in the near to medium term.”
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