Survey: Unstable Energy, Govt Policies Squeezing Nigeria’s Manufacturers


Chineme Okafor in Abuja

The latest result of a survey conducted on the productivity of Nigeria’s manufacturing sector by an independent socio-economic polling agency, NOIPolls has revealed that a larger number of manufacturers in the country are currently finding it hard to maintain their productivity on account of several factors.

Conducted in collaboration with the Centre for the Study of the Economies of Africa (CSEA), the poll result stated that unavailability of petrol and diesel, poor power supply, policy inconsistency, and limited access to credit are the major challenges facing the manufacturing sector in Nigeria.

The poll result, which was released recently in Abuja explained that majority of the manufacturers surveyed stated that when compared to one year ago, the availability of petrol and diesel, power supply, and access to credit, as well as relative stability in government’s policy, have worsened.

It noted that about 78 per cent of the manufacturing outfits that participated in the survey revealed they have been negatively affected by the disparity in foreign exchange rates in the country.

“This cuts across the different company-size categories as large-(83 per cent), medium-(76 per cent), and small-(78 per cent) indicated this negative impact of forex. This finding is particularly poignant as 52 per cent of sampled companies disclosed that they are highly dependent on imported inputs in their production, and only 25 per cent indicated that the export market was highly important to their turnover,” said the result of the poll.

It further stated that a majority of sampled firms (60 per cent) decried the lack of support within their current business environment; with at least 90 per cent of the firms not operating up to their optimum installed capacity, and 45 per cent operating below 60 per cent of installed capacity.

The survey however noted that they are upbeat and have a positive outlook on the economy over the next one year, with 76 per cent expecting economic conditions in the country to improve.

The report said: “In summary, due to the chronic challenges of infrastructure and inputs, the Nigerian manufacturing sector is yet to transit from a demand-driven regime to a supply-driven regime that is essential for long-run growth.
“In the present demand-driven regime, population growth estimated at 3.2 per cent per year is expected to strengthen local demand and stimulate growth, most notably in the necessities subsectors – food and textiles.”
It explained that the contraction of these two sectors during the period reviewed presents an ominous sign that needs to be carefully analysed and clearly understood, adding that responses to the poll show that the manufacturing sector remains dependent on the international market because it buys inputs many times more than it supplies products to foreign markets.

Also, the poll said that among the companies sampled, about 60 per cent consider the current business environment unsupportive, with only 31 per cent stating that the environment is supportive.

It said: “Interestingly, the geographical breakdown shows that while companies in the North East (93 per cent), North West (73 per cent) and South East (68 per cent) find the business environment unsupportive; only companies in the South West (65 per cent) seem to suggest that the business environment is somewhat supportive.
“Overall, one a scale of 1 to 5, the average score for the business environment is 2.6 points, which is about average.”