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By Merit Ibe [email protected]
The Manufacturers Association of Nigeria (MAN) said sourcing of local raw materials by the sector steepened to 52 percent (year-on-year) in the first half of 2022 down from 53 percent of corresponding half in 2021.
In its executive summary of H1 2022 tagged: ‘Global and Nigerian Macro-economic Highlights,’ the association noted that it indicated 1 percentage point decline over the period, however, local sourcing increased by 2 percentage points (half-on-half) when compared with 50 percent recorded in the second half of 2021.
According to the Director General, Segun Ajayi-Kadir, the manufacturing sector is generally faced with limited investment in domestic production of raw materials for utilisation in most of the sub-sectors, which is as a result of limited funding and policy incentives in the country.
He said the Basic Industrial Chemical sub-sector faced severe inactivity in the first six months of 2022 due to lack of domestic production of basic chemicals.
He therefore reiterated the need to resuscitate the local refineries to encourage investment in petrochemical development in the country.
The DG empahasized the need to incentivise investment in local development of raw materials; give attention to domestic production of Active Pharmaceutical Ingredients (API) and basic chemicals by incentivising investment in the area; refocusing on backward integration and resource-based industrialisation; and reverse the duty for annealed cold roll back to 45 percent from the new 5 percent. He also advocated the resuscitation of existing national refineries to produce fuels locally; review the gas pricing for domestic consumption to be in tandem with the export price which is about $3.25 per cubic meter.
The MAN boss further called for improvement in the level of forex allocation to the productive sector, including manufacturing, leveraging on the high and sustained crude oil prices in the international market.
Ajayi-Kadir also noted that poor electricity supply from the national grid has resulted to local manufacturers’ expenditure on alternative energy source soaring to N67.77 billion in the first quarter of 2022 (year-on-year) on automotive gas oil (AGO) otherwise known as diesel and other energy components.
He admitted that electricity supply from the national grid to the manufacturing sector degenerated in the period under review and this forced local manufacturers to shift attention to spending on alternative energy source, culminating in rising cost of production and inflationary rate in the country.
“Electricity supply from the national grid to the sector degenerated in the period under review. Although, average daily supply to the sector increased to 12 hours in the first half 2022 from 11 hours of the second half of 2021, the average number of outages per day increased six times from three recorded in the preceding half, which more than off-set the increase in supply in the period.
