Manufacturers Association of Nigeria Pleads With Federal Government to Clear FX Backlogs of $7 Billion

The Manufacturers Association of Nigeria has revealed that 2024 may end up being a disturbing year for manufacturers, as it sees the first six months as a tougher one in 2024 for key players in the industry.

Manufacturers Association of Nigeria (MAN) has urged the Federal Government to settle the current $7 billion forex backlog.

The association's director-general stated this in its “Manufacturing Sector Outlook for 2024,” made available to The PUNCH.

According to the organization, 24 sectoral real growth is expected to hit about 3.2%; contribution to the economy will most likely exceed 10%; and the Manufacturers’ CEOs Confidence Index is predicted to rise above 55-point thresholds by the end of Q4 2023.

Average capacity utilization is expected to hover around the 50% threshold as the forex-related challenges and high inflation rate limiting manufacturing performance may linger until mid-year.

The report read, in part, 

• Judging from the observed trend, it is obvious that the outlook for the manufacturing sector in 2024 may not be a positive one, at least in the first half of the year. The period will be challenging, with a subtle possibility of recovery from the third quarter.

• The envisaged recovery is highly dependent on deploying policy stimulus supported by a synthesis of domestic growth-driven, export-focused, and offensive trade strategies. This will promote resilience and steady growth and ensure the sector gains meaningful traction later in the year.

However, MAN reveals that the sector may experience a meager improvement in manufacturing output as forex and interest rate-related challenges are expected to subside in the third quarter.

MAN also predicts higher manufacturing output from the beginning of the year's third quarter as the government disburses capital provisions of the budget to abandoned, ongoing, and new capital projects, with expected special preference for locally made products.

By recommendation, the association advised the government to expend cost savings from fuel subsidy to deploy a bouquet of production-focused policies backed by more structural measures to combat the peculiar inflationary pressures from insecurity, energy, and transport costs.

It also recommended overhauling the power sector and incentivizing investment in renewables to boost electricity generation and promote energy-cost efficiency.

Ajayi-Kadir added, 

• The government should maintain all measures to boost liquidity and transparency in the official forex window even as the backlog of $7 billion forex obligations is being cleared.

• They should also prioritize forex and credit allocation to the manufacturers and reduce the number of BDCs into large and well-established operators to curb their excesses and untoward operations through effective management and supervision.