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Saturday, November 18, 2017.

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Nigerian News » Politics
 
 
 
 

Manufacturing sector’s contribution to GDP shrinks by N80bn


 
 
 
 
The scarcity of foreign exchange as well as the harsh operating environment took its toll on the operations of the manufacturing sector in the 2016 fiscal period with the sector recording a decline of N80bn in its contribution to Gross Domestic Product.

An analysis of the GDP figures based on current prices obtained from the National Bureau of Statistics showed that the manufacturing sector’s contribution to the economy dropped from N8.97tn as of the end of December 2015 to N8.89tn as of the end of December 2016.

There are 13 sub-sectors that constitute the manufacturing sector. Nine of them recorded increase in economic performance while only four recorded decrease in productivity.

The nine sub-sectors with increase in economic performance are oil and refining, which rose from N248.02bn in 2015 to N276.59bn; textile apparel and footwear, which increased from N1.87tn to N2.02tn; and wood and wood products from N259.35bn to N275.1bn.

Others are pulps and paper products from N66.09bn to N70.7bn; chemical and pharmaceuticals products from N190.12bn to N197.7bn; non-metallic products from N315.59bn to N344bn; plastic and rubber products from N267.16bn to N291.4bn.

The rest are electrical and electronics from N6.02bn to N6.19bn; basic metal, iron and steel from N207.3bn to N219.57bn.

On the other hand, the four sub-sectors that recorded some decline in economic activities, according to the NBS report, are cement, dropping from N749.93bn in 2015 to N649.6bn in 2016; food, beverages and tobacco, from N4.29tn to N4.1tn; motor vehicle and assembly from N70.05bn to N52.79bn and other manufacturing from N431.1bn to N390.7bn.

The report read in part, “For full year 2016, the manufacturing sector in real terms contracted by 4.32 per cent, compared to a decline of 1.46 per cent recorded in 2015.

“This reflects a number of challenges faced by manufacturing in 2016, such as higher costs of imported inputs as a result of the exchange rate; and higher energy costs as a result of a fall in electricity generation, and more expensive fuel.

“Real GDP growth in manufacturing remained negative in Q4 2016: a contraction of 2.54 per cent was recorded (year-on-year). This was an improvement relative to the decline of 4.38 per cent recorded in the third quarter, but low relative to the growth of 0.38 per cent recorded in the fourth quarter of 2015.

“Just four of the 13 activities under the manufacturing recorded growth in Q4 2016, compared to three in Q3 2016. Seven of the activities, nevertheless, performed better than in Q3 2016. On a quarter-on-quarter basis, the sector grew by 1.89 per cent.”

The President, Abuja Chamber of Commerce and Industry, Mr. Tony Ejinkeonye, while speaking on the development described the 2016 year  as a difficult period for manufacturers, owing to the harsh economic climate and forex scarcity.

He, however, said the recent policies of government were bringing back confidence in the economy and if effectively implemented would ensure economic recovery.

He said, “The current policy of government can take us out of recession in the sense that in the last engagement that the Abuja Chamber of Commerce and Industry had with the Federal Government particularly the Acting President of Nigeria, Prof Yemi Osinbajo, and the ministers of trade, planning, and finance, the government reeled out its economic plans.

“We embraced those plans and we were assured that they were going to carry them out in an assiduous manner. And from the few things that they have already started doing, like I know they held a meeting with some manufacturers from Aba, and immediately Standards Organisation of Nigeria, the National Agency for Food and Drug Administration and Control, and some agencies agreed to reduce the licensing period from about six months to three months and some others.

“Those are the kind of things we want to hear and see. So, if they continue on this path, I believe that Nigeria can come out of recession.”

The President, Manufacturers Association of Nigeria, Mr. Frank Jacobs, said there was a need for the government to fast-track the establishment and operation of the Development Bank of Nigeria in order to make funds available to manufacturers.

He also urged the government to encourage more people to go into manufacturing by reducing the tax burden  as well as offering them more incentives.

He said, “They (government) need to do something about infrastructure, especially now that a lot has been budgeted for infrastructure.

“We demand a religious implementation of the budget for this year as well as completing the implementation of last year’s budget because it does appear that much was done with last year’s budget.

“If those two budgets are fully implemented, some of the challenges of the manufacturing sector will be addressed.”
 
 
 
 
 
 
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