Nigeria recorded N4.784 trillion in estimated cumulative manufacturing investment in six years, data from Manufacturers Association of Nigeria (MAN) economic review for the first half of 2019 has shown.
Based on the data generated from surveys conducted by MAN from 2013 to first half of 2019 showed that manufacturing sector investment stood at N238.45 billion in the first half of 2019, representing N67.11 billion or 21.9 percent decline from N305.56 billion recorded in the corresponding half of 2018.
It also declined by N8.63 billion or 3.5 percent when compared with N247.08 billion recorded in the second half of 2018.
Manufacturing investment, in the period, was affected by late passage of 2019 budget which affected capital expenditure implementation, poor economic support infrastructure, over regulation and high cost of capital in the economy.
The survey also revealed that in the first half of 2019, investment in Plant & machinery ranked highest with investment worth N100.92 billion, though lower than N110.47 billion recorded in corresponding half of 2018 but higher than N72.98 billion recorded in the second half of 2018. Asset Under construction trailed with investment worth N84.06 billion; Land and Building with investment worth investment worth N40.35 billion; Motor Vehicle with investment worth N7.97 billion; and Furniture and Fitting with investment worth N5.15 billion in the first half of 2019.
Across sectoral groups, Food, Beverage and Tobacco group ranked highest with investment worth N73.95 billion in the first half of 2019, though lower than N86.94 billion and N123.13 billion recorded in the first and second halves of 2018 respectively. This trailed by Chemical & Pharmaceutical (N51.76 billion); Basic Metal, Iron & Steel (N33.06 billion; and Motor Vehicle & Miscellaneous Assembly (22.54 billion) in the period.
Analysis based on industrial zones, Ogun ranked highest in the first half 2019 with investment N74.56 billion, though lower than N95.31 billion recorded in the first half of 2018 but high than N26.16 billion recorded in the second half. However, Ogun zone maintains the investment destination hub of Nigeria. Ikeja zone recorded investment worth N55.98 billion in the first half of 2019, though higher than N54.8 billion of the corresponding half of 2018 but lower than N80.76 billion achieved in second quarter of 2018. Investment in Apapa zone declined to N18.52 billion as against N93.67 billion recorded in the first of half of 2018 and N47.29 billion in the second half.
Nigerian manufacturers are ramping up investments in various sub-sectors and economic watchers believed should be encouraged.
MAN believed that sustaining these investments requires the implementation of the harmonised taxes and levies project.
MAN said that there is a need to re-classify the manufacturing sector into strategic gas users from the current commercial gas users classification, adding that this would cut gas prices and eventually production costs.
“We must continue to entrench better exchange rate management. Forex allocation should tilt more to the industrial sector, including the SMEs,” it stated.
MAN urged the federal government to monitor and enforce the Executive Orders 003 and 005 on patronage of made in Nigerian goods by Ministries, Department and Agencies (MDAs) of the government and local content.
“It is important to further construct a realistic margin of preference, which will be applied by MDAs in their procurement decisions. MAN had earlier suggested 30 percent,” the association stated.
It stresses the need to encourage the state and local governments to embrace patronage of made-in -Nigerian products by toeing the footsteps of the federal government.
The body also urged the government to continue to support the resource-based industrialisation and backward integration in the country through appropriate incentives and funding support to investors.