The Purchasing Managers Index (PMI) of the Central Bank of Nigeria, CBN, for the month of December 2018 has revealed improved performances across the sectoral groups except for the Electrical and Electronics sectoral group.
This is contained in a release by the Economics and Statistics Department of the Manufacturers Association of Nigeria (MAN) made available to Business & Maritime West Africa.
Although the performance of the Electrical and Electronics Sectoral Group recorded above 50 points benchmark, its basis point contracted by 6.7 points owing mainly to the menace of smuggling and counterfeiting that have continually plagued its performance. As the report indicates, government needs to support operators in the Group with policies that will discourage unbridled inflow of used and smuggled electrical and electronics products into the country.
The Textile Apparel and Footwear Sectoral Group (TAFSG) recorded the most significant improvement with a positive change of 13.9 points. The performance of this Group in recent times could be attributed to a number of factors including fiscal support, improved local patronage and incentives for cotton growers. Others factors are increasing access to development finance windows, and the recent approved concessional gas pricing mechanism. Cumulatively, all of these aided productivity of TAFSG.
In performance ranking, the TAFSG was followed closely by Motor Vehicle & Miscellaneous Assembly Group (MVMAG) with 12.5 points increment. This is however surprising because in real terms, the MVMAG was reported to have recorded increase in basis points without a virile auto component allied industry, with the prevailing low patronage of locally assembled automobiles and the obvious abuse of some provisions of the Automotive Policy by some portfolio investors, which indirectly aids importation of fully assembled automobiles to the detriment of locally assembled vehicles. The 6Ps sectoral Group also recorded an increase of 9.1 points even though it is still high import- dependent for vital raw materials.
For the last two months of 2018, meanwhile, all indices used in measuring Purchasing Managers’ Index recorded improved performance, a development that indicates that the manufacturing sector is on the path of sustainable growth. Undoubtedly, the improved economic spending that characterized the festive period and increasing tempo of patronage of Made in Nigeria products spurred the performance of the sector in December.
In broad terms, the report revealed relative improvement in manufacturing sector performance, attributable to increasing support for manufacturing, fairly improved environment and the efficacy of the prevailing economic policies aimed at stabilizing the economy.
Notwithstanding, the manufacturing sector is still faced with myriad of challenges, ranging from infrastructure deficit, multiplicity of taxes, policy contradictions, exorbitant cost of clearing and transporting raw materials from the ports to factories, poor access to Lagos Ports, weak port infrastructure to increasing incidences of smuggling and counterfeiting. These challenges have jointly constrained the manufacturing sector from attaining its full growth potentials.
It is worthy of note, however, that for two consecutive months now, no sectoral group recorded below 50 points benchmark which shows a reasonable level of improvement in the manufacturing sector performance and a pointer to a good outing in the last quarter of 2018.