Olufemi Adeyemi 

A decline of 1.7 points in the Manufacturers Association of Nigeria (MAN)'s third-quarter 2024 confidence index reflects the challenging macroeconomic environment currently impacting Nigeria's manufacturing sector.

The Manufacturers' CEOs Confidence Index (MCCI) declined to 50.2 points in the third quarter of 2024, a decrease from the 51.9 points reported in the preceding quarter.

MAN's Q3 report reveals a decline across all current indices, falling below the 50-point benchmark. This downturn reflects a challenging business climate marked by elevated energy costs, unfavorable exchange rates, increasing interest rates, persistent inflation, and unreliable fuel supply. An index exceeding 50 points suggests anticipated economic expansion; conversely, a sub-50 score indicates a contracting operating environment.

The report notes that all indices projected for the fourth quarter also showed a decrease, although each forecast remains above the 50-point mark. This implies that while confidence levels are declining, there is still moderate business optimism for the fourth quarter, attributed to the upcoming festive season.

Sector-wise analysis revealed that five out of ten groups reported confidence levels below the 50-point benchmark compared to the second quarter of 2024. These groups include Domestic/Industrial Plastic and Rubber (48 points), Food Beverage and Tobacco (47.5 points), Motor Vehicle and Miscellaneous Assembly (44 points), Textile, Apparel and Footwear (44 points), and Wood and Wood Products (48 points).

The report further highlighted that the confidence of operators in these sectors has been significantly affected by inflationary pressures, an increase in imported goods, low government patronage, and high raw material costs.

In industrial zones, manufacturers located in Apapa, Ikeja, Imo/Abia, Oyo/Ondo/Osun/Ekiti, and Rivers/Bayelsa demonstrated notable resilience despite the challenging business climate during the review period.

The Manufacturers Association of Nigeria (MAN) acknowledged the Central Bank of Nigeria's (CBN) initiatives aimed at controlling inflation and stabilizing the naira. However, the association pointed out that the existing macroeconomic challenges indicate that monetary tools have limited effectiveness in addressing the wider economic issues.

MAN called on policymakers to enhance their efforts by focusing on the fundamental causes of the economic crisis instead of merely treating the symptoms.

Consequently, the association recommended that fiscal authorities collaborate closely with monetary authorities to implement essential structural reforms in a well-coordinated manner.

Achieving double-digit growth and fostering a conducive macroeconomic environment will necessitate a shift in policy priorities. It emphasized that monetary policy should be complemented by a strong fiscal framework and thorough structural reforms.