Manufacturers CEO Index Rises To 55.4 Points In Q4′ 2021

The Manufacturers Confidence Index (MCCI) has said Manufacturers Chief Executive Officers (CEO) Confidence Index (MCCI) increased to 55.4 points in the fourth quarter (Q4), 2021 from 54.0 points obtained in the preceding quarter (Q3).

MAN disclosed this in its latest MCCI report recently.

This shows improved performance in the period and the growing confidence of manufacturers in the economy.

The MCCI is an index constructed by the Manufacturers Association of Nigeria (MAN) to measure changes in the quarterly pulsation of manufacturing activities concerning movement in the macroeconomy and government policies.

The Index is therefore barometer used by MAN to aggregate the views of CEOs of manufacturing companies on changes in the economy. The standard diffusion factors considered in the MCCI processes include the current business condition, business condition for the next three months, current employment condition (rate of employment), employment condition for the next three months and production level for the next three months.

Index for Current Business Condition increased by 1.15 points in the quarter under review from 50.3 points recorded in the third quarter of the year.

Similarly, Index for Business Condition increased by 3.2 points in the quarter from the 55.8 points obtained in the preceding quarter. In the period under review, the economy witnessed improvement in the volume of economic activities due to the conventional positive seasonal effect notwithstanding the hangover and various waves of COVID-19.”

The Index for Current Employment (Employment Rate) increased by three points in the quarter under review from 47.6 points obtained in the third quarter of the years. In the same vein, Index for Employment Condition for the next three months increased by 2.1 points from 52.3 points recorded in the preceding quarter.

MAN report stated that the increasing index of employment reflects the improvement in business condition in the economy during the quarter under review, saying that “It also shows that manufacturers are beginning to engage/re-engage workers after the unplanned retrenchment forced by COVID-19 pandemic and other economic challenges.”

The Index for Production level for the next three months however decelerated to 61.5 points from 64.3 points obtained in the third quarter of the year; thus, indicating by 2.8 points decline over the period.

According to MAN, ” the decline can be attributed to the poor access to forex for the importation of vital raw materials and machines that are not available locally; the progressive erosion of the disposable income of consumers; the sluggishness associated with the first quarter of the year promoted by the uncertainty around the likelihood of another lockdown in the wake on the new wave of COVID-19.”

The report stressed that “in the quarter under review, the perspectives of CEOs on the state of manufacturing operating environment revealed mixed grilled performance; encouraging but slow positive growth; over-regulated, high cost and manufacturing unfriendly environment.

“On the high side, CEOs affirmed gradual reduction in inventory of unsold finished goods; improvement in local sourcing of raw materials and patronage of made in Nigeria goods.

“On the low side CEOs confirmed that issues of multiple and duplication of regulation, which often find expression in the excessive drive for tax revenue instead of widening the tax net; unfriendly tax practices of government agencies; poor access to the national ports leading to the high cost of clearing cargo and transporting goods are seriously impeding the performance of the manufacturing sector.”

“The effect of the macroeconomic environment that prevailed in the quarter under review was overwhelming in differing magnitudes on key manufacturing indicators such as production and distribution costs; capacity utilization; volume of production; investment; employment; sales volume; and cost of shipment.

“This further strengthened the perception of a mixed grilled performance, visibly exposed the hotspots and served as a pointer to the fact that the sector is still challenged and requires comprehensive policy support.”

The president of MAN, Engr. Mansur Ahmed stated that manufacturing performance is still below the mark, notwithstanding the marginal improvement in the operating environment during the quarter under review, as the sector is still plagued by numerous familiar constraints, adding that to improve the performance of the sector, the government needs to intentionally put in place mechanism that will address challenges affecting the sector permanently.