Nigeria records 5.3% improvement in manufacturers’ capacity utilisation

Capacity utilisation in the manufacturing sector increased to 59 per cent in the second half of last year from 53.7 per cent recorded in the corresponding half of the previous year, indicating 5.3 percentage points increase over the period.

It increased by 6.6 percentage point when compared with 52.4 per cent recorded in the preceding half. Capacity utilisation in the sector averaged 58.9 per cent in 2021 from 49.5 per cent average of 2020.

The Manufacturers Association of Nigeria (MAN) ‘Second Half-Economic Review 2021’ (July-December 2021) attributed the increase in manufacturing capacity utilisation to the easing of economic and social restrictions meant to contain the COVID-19 pandemic and the full rebounding of economic activities globally and in Nigeria within the period.

According to The Nation, the Review also said there were increased capacities in the paper sub-sector brought in by five new paper mills that are into recycling of waste papers to produce cartons.

MAN added that the increase in manufacturing capacity utilisation also came on the back of additional capacities, as BUA Group introduced a cement factory in Sokoko while the new African Glass Limited factory produced glass products.

According to MAN, the performance shows that manufacturing is fast returning to the 2019 pre-COVID-19 level of activities in the country.

Analysis of the 10 sectoral grouping showed that manufacturing capacity utilisation increased in almost all the groups in the period under study.

For instance, in the second half of 2021, manufacturing capacity utilization in the Food, Beverage and Tobacco sectoral group increased to 62 per cent from 58 per cent recorded in corresponding half of 2020.

This, according to the Review, represented four percentage points increase over the period. It also increased by 9.6 percentage points when compared with 52.4 per cent recorded in the preceding half.

Also, in the Textile Apparel& Footwear group, manufacturing capacity utilization increased to 67 per cent in the second half of 2021 from 54 per cent recorded in the corresponding half of 2020.

This indicated 13 percentage point increase over the period. It also increased by 16.8 percentage points when compared with 50.2 per cent recorded in the first half of the year.

Similarly, in the second half of 2021, manufacturing capacity utilization in the Domestic & Industrial Plastic group increased to 65 per cent from 56 per cent recorded in the corresponding half of 2020, indicating nine percentage points increase over the period.

It also increased by 13.1 percentage points when compared with 51.0 per cent recorded in the corresponding half of 2020.

In the Electrical & Electronic sectoral group, manufacturing capacity utilization increased by 63 per cent in the second half of 2021 from 50 per cent recorded in the corresponding half of 2020, indicating 13 percentage points increase over the period.

It also increased by 13.9 percent when compared with 49.1 percent recorded in the preceding half.

Also, manufacturing capacity utilization in the Basic Metal, Iron & Steel sectoral group increased to 60 per cent in the second half of 2021 from 51 per cent recorded in the corresponding half of 2020, indicating nine percentage points increase over the period.

It also increased by 2.7 percentage points when compared with 57.3 per cent achieved in the first half of the year.

Unfortunately, however, manufacturing capacity utilization in the non-Metallic Mineral products declined to 46 per cent in the second half of 2021 from 53 per cent recorded in the corresponding half of 2020 and the first half of 2021 respectively.

This showed four percentage points decline over the period. Capacity utilization in the sector averaged 49.5 per cent in 2021 as against 49.9 per cent of the 2020.

MAN President Engr. Mansur Ahmed explained that manufacturing activities in the non-Metallic Minerals sector have been persistently low following the exclusion of some of the veritable raw materials for glass production which are imported from the official forex window.

“The situation is worsened by the limited availability and high cost of prospecting for local development raw materials in the country,” he said.

Mansur stated that just as the world economy strongly rebounded in 2021 following the continuous containment of the COVID-19 pandemic and the opening of global economies, the Nigerian economy and the manufacturing sector also reflected this positive movement in their output growth in the year.

He said the economy, for instance, leapt from -1.94 growth rate in 2020 to 3.38 per cent in 2021, just as the manufacturing sector growth increased from -2.85 per cent in 2020 to 3.37 percent in 2021.

The MAN president, however, said notwithstanding the improved performance of the manufacturing sector during the year, it was still far beyond its potential growth and contribution to national output due to almost innumerable challenges confronting the sector.

He, therefore, recommended that Government should create plausible incentives for investment in the development of raw materials locally through the Backward Integration Policy (BIP) and the resource based industrialization initiatives.