In the most recent Business Expectations Survey (BES) conducted by the Central Bank of Nigeria (CBN), manufacturers in Nigeria expressed a lack of confidence in the nation’s economic prospects in August 2024. The poll, which involved 1,600 commercial organizations, revealed differing opinions in several industries. Significant pessimism was displayed by the Manufacturing and Construction industries, with indices of -5.5 and -10.0 points, respectively. By contrast, industries with an index of 30.4 points, such as mining, quarrying, and power, showed confidence.
According to the survey, the industry sector remained negative in August, while the Agriculture and services sectors showed optimism. Forecasts for the upcoming month, however, indicated confidence in every industry. In particular, it was anticipated that the industry sector would improve to -3.9 points, while the agricultural and services sectors would have indices of 5.2 and 1.2 points, respectively. Subsector breakdowns indicated that while manufacturing and construction remained in negative outlooks, mining, quarrying, power, gas, and water supply showed optimism.
MAN expressed disapproval of the government’s high taxes and levies.
A few major factors that added to the pessimism were high interest rates, many taxes, insecurity, an unfavourable economic environment, and a lack of power. Manufacturers’ confidence in the state of the firm has decreased as a result of these difficulties in sustaining efficient operations. Nonetheless, cautious optimism prevailed for the upcoming months, with a predicted confidence index of 7.7 points indicating a minor improvement in the manufacturing sector in September. Mr. Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN), expressed disapproval of the government’s high taxes and levies.
The difficulties facing the industry have been made worse by these taxes and levies, high Electricity prices, and fluctuations in foreign exchange. A wide spectrum of company emotions across sectors is revealed by the Central Bank of Nigeria’s (CBN) August 2024 company Expectations Survey (BES). Construction and manufacturing both had negative confidence indexes of -10.0 and -5.5, respectively, reflecting pessimism. The Mining and utility industries, on the other hand, had a high rating of 30.4 points, indicating optimism.
Mining and utility industries have consistently displayed confidence.
This difference demonstrates the diverse economic realities that Nigeria’s many sectors must contend with. The main causes of the manufacturing sector’s problems include excessive taxes, unstable foreign exchange rates, and inadequate electricity supplies. Manufacturers’ operational costs have increased dramatically as a result of high electricity bills and irregular power supplies. The numerous and expensive taxes levied by the government, in the opinion of Mr. Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN), make matters worse.
Due to these unfavourable circumstances, manufacturers are finding it difficult to sustain output levels and profitability. When comparing the August 2024 statistics to earlier months, the manufacturing and construction industries show a discernible decrease in business confidence. Nonetheless, despite the larger economic difficulties, the mining and utility industries have consistently displayed confidence, indicating stability or growth in these sectors. According to historical statistics, the manufacturing sector has been experiencing pressure for a number of months, which is indicative of persistent structural challenges within the economy.
Related Article: Businesses Expect Naira to Depreciate
Policies like lowering industrial customers’ electricity rates and streamlining the Tax code are essential to addressing these issues. Manufacturers’ operating expenses could be reduced with investments in infrastructure, especially in the areas of power and transportation. Furthermore, government programs designed to stabilize the foreign exchange market can offer some respite to producers who rely on imported raw materials. These steps, along with focused assistance for industries with low confidence indices, may contribute to a general improvement in business sentiment.