The Manufacturers Association of Nigeria (MAN), under the leadership of its Director General, Segun Ajayi-Kadir, mni, has provided an incisive analysis of the GDP report for Q3 2024, recently released by the National Bureau of Statistics (NBS). The report indicated a promising growth rate of 3.46%, marking an improvement from 2.54% in the same quarter of 2023 and 3.19% in Q2 2024. While the growth offers a glimmer of hope, MAN emphasized that critical challenges continue to stifle the manufacturing sector, which remains pivotal to Nigeria’s industrialization agenda.
The NBS attributed the GDP uptick largely to the Services sector, which grew by 5.19% and contributed 53.58% to the economy. In contrast, agriculture posted a modest 1.14% growth, down from 1.30% in Q3 2023, while the Industrial sector saw a recovery at 2.18%, a leap from 0.46% in the same period last year. Notably, manufacturing—an essential sub-sector within industry—recorded a tepid 2.18% growth, further exposing the sector’s vulnerability to high costs, policy inconsistencies, and macroeconomic headwinds.
Sectoral Highlights
Despite the challenges, sub-sectors like Chemical & Pharmaceutical Products, Food, Beverage & Tobacco, and Cement contributed significantly to manufacturing output. However, year-on-year, manufacturing growth slowed to a meager 0.92%, with its GDP contribution shrinking to 8.21%—down from 8.42% in Q3 2023.
The Services sector’s dominance, led by Information and Communication, Trade, and Financial Services, presents a double-edged sword. While driving short-term growth, this trend underscores the neglect of the manufacturing sector, which is critical for value addition, forex stability, job creation, and sustainable development.
Key Concerns
Ajayi-Kadir expressed concern over the weak performance of agriculture and manufacturing, both of which are fundamental to a robust industrial base. The decline in the real growth of the Manufacturing Sector reflects the adverse impact of high inflation, skyrocketing energy costs, and the exit of major multinational firms.
“The reality is stark. Without targeted interventions, Nigeria risks derailing its industrialization goals, compromising employment prospects, and falling short of its $1 trillion economy target by 2026,” Ajayi-Kadir remarked.
Implications and Recommendations
The subdued growth of agriculture has escalated raw material costs, exacerbating production challenges for manufacturers. Consumer purchasing power remains weak due to inflation and unemployment, leaving manufacturers grappling with unsold inventory. These dynamics have deterred both local and foreign investors, further weakening the sector.
MAN has outlined actionable recommendations to revitalize the manufacturing sector, including:
1. Establishing special funding windows with single-digit interest rates for SMEs and large-scale manufacturers.
2. Recapitalizing the Bank of Industry (BOI) to address credit shortages.
3. Reducing import duty on critical inputs not locally available and streamlining customs procedures.
4. Addressing power supply issues by prioritizing domestic gas allocation and enforcing transparent, Naira-based pricing.
5. Implementing infrastructure upgrades through public-private partnerships.
6. Retaining favorable excise duty rates and addressing multiple taxation.
A Call to Action
MAN DG underscored the need for a policy overhaul to unlock the manufacturing sector’s potential. He urged the federal government to focus on long-term solutions that balance services-led growth with industrialization, ensuring inclusive economic development.
“Without a vibrant manufacturing sector, our aspirations for job creation, value addition, and sustainable growth will remain elusive,” he concluded.
This reflection on the GDP report serves as a clarion call for decisive action to reposition manufacturing as the backbone of Nigeria’s economy.
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