Manufacturers see poor power supply as biggest challenge

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Manufacturing

Friday, May 3,2019

Manufacturers in Nigeria have expressed lack of confidence in the power sector.

 

This was revealed by the Manufacturers CEOs Confidence Index for the first quarter of 2019.

The Manufacturers CEOs Confidence Index is a quarterly survey conducted by the Manufacturers Association of Nigeria to measure the pulse of the manufacturing sector.

While presenting the report to journalists in Lagos recently, the President, MAN, Mansur Ahmed, who was represented by the Chairman of the MAN Economic Policy Committee, Mr Paul Gbededo, said, “During the fieldwork of the project, our respondents were requested to itemise a number of challenges confronting the sector in order of severity.

“The outcome shows that poor electricity supply was ranked first; multiple taxation and over-regulation were jointly ranked second; high interest rate was third; poor access to Nigerian ports and delay in clearance of containers/cargoes and the attendant demurrage were ranked fourth.”

The MCCI First Quarter 2019 was the maiden edition that took into account manufacturers’ perception on a set of diffusion factors, which include: current business condition, business condition for the next three months, current employment condition, rate of employment, employment condition for the next three months and production level for the next three months.

The analysis also took into consideration the general macro-economic condition (foreign exchange, lending rate, credit to the manufacturing sector and capital expenditure of the government) and the business operating environment (over-regulation, multiple taxes/levies, access to seaports, local raw-material sourcing and government patronage of made-in-Nigeria goods).

Ahmed noted that the result of the MCCI was critical to strengthening the advocacy mandate of the association.

Explaining why power generation received the lowest rating in the survey whose respondents were the Chief Executives Officers of MAN-member companies across the six geo-political zones of the country, Gbededo said despite the efforts put in by the government and other stakeholders, power had continued to constitute the greatest challenge for the manufacturing sector.

According to him, this is because power generation in the country is dependent on the supply of gas, which in itself is susceptible to fluctuations due to frequent attacks on gas pipelines.

He said, “Power is still the biggest challenge to manufacturers, especially the ones in the Small and Medium Enterprises sector, because they rely almost totally on public power supply.

“The big firms generate their own electricity most of the time and the cost of generating this power increases the cost of production and therefore the products may not be competitive even in Nigeria.

“That is why solving the issue of electricity will see us becoming more competitive and easing the pain of manufacturers. “

Overall, the aggregate MCCI for the first quarter of 2019 stood at 51.3 points, which is slightly above the 50 points benchmark of good performance.

According to the association, this performance substantiates the need to pay attention to myriad of operating challenges hindering the sustenance of growth in the sector, notwithstanding numerous policies designed to incentivise real sector of the economy.

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