To lessen the negative effects of international operations on the economy, local manufacturers in the nation have encouraged the Federal Government to create durable national anticipatory policy measures against external impacts.
The lingering effects of the COVID-19 pandemic and the current Russian-Ukrainian war, according to the Manufacturers Association of Nigeria (MAN), added to the already pressing local issues.
They pointed out that, in addition to the necessity for zealous management of world peace, a succession of global events and the lessons learned call for national governments to start acting draconian in order to handle these phenomena going future.
Although the operating environment in the quarter under review was somewhat better than the condition in the prior quarter due to compelling adjustments made by the government, manufacturers, and households in response to general increases in price, forex shortage, increasing cost of energy, scarcity of raw materials, and many more, thrown up by World War I, the local operators noted that in the most recent Manufacturers CEO’s Confidence Index (MCCI) for the second quarter of 2022.
MAN reported that the improvement in index score was attributed to the feedback on the anticipated improvement in business condition, employment condition, and production level in the third quarter of the year, with an aggregate MCCI score that increased to 54.6 points during the quarter from 53.9 points of the first quarter of the year.
Results of the sectoral study revealed that, despite falling short of the 50 baseline points, the Wood and Wood Products sector’s Index score for the second quarter of the year is 49 points, which is a slight improvement over the 48.9 points it received in the first half of the year.
The Electrical & Electronics group’s index score increased to 50 points from the 49.9 points it had in the previous quarter. The Motor Vehicle & Miscellaneous Assembly Index increased from 49.2 points in the previous quarter to 50.1 points, which is above the baseline.
MAN has previously issued a warning that the sector’s lax policy and blatant lack of commitment to implementing important policy goals had led to a number of negative economic reactions.
Speaking on the nation’s soaring inflation, the association’s Director General (DG), Segun Ajayi-Kadiri, claimed that the statewide fuel shortage experienced in June was largely to blame.
He claimed that the lack of fuel forced an increase in energy costs, especially for diesel, aviation fuel, and gasoline, which all had a nationwide ripple effect on the price of food, manufactured goods, other commodities, transportation, and lodging.
Most significantly, he noted, the cost of diesel has increased by nearly 230 percent over the past year.
The National Bureau of Statistics (NBS) reports that headline inflation for June 2022 was 18.6%, up 0.85% percentage points over the 17.75 percent recorded in the same period of 2021.
The report, according to MAN, showed that the 18.6% rate portends a slow rise to the 18.72% peak inflation rate recorded in January 2017. MAN claims that this is a worrying acceleration of the inflation rate that needs to be stopped, especially given the impending socio-political and economic activities that cause spikes in inflation.
The DG emphasized the need for the oil and gas industry to be strategically positioned to profit as much as possible from future interruptions in the global supply that lead to an increase in the price of crude oil, adding that “It is appalling that an oil-producing country like Nigeria is at a disadvantage at a time when global oil prices are rising.”
He urged the government to give permits for new refineries and support the Dangote refinery’s startup in order to expedite the process of securing sustainable local refining of petroleum products.
This will undoubtedly ease the strain on the foreign reserve and lessen the economy’s sensitivity to the shock to external supplies that has caused the energy crisis.
According to the MAN, it is critical that the government work to always meet the OPEC-mandated oil production limit, boost oil revenue, and minimize the budget deficit that has exacerbated inflation.