With a decline of 6.5 per cent in raw materials import in the first quarter of 2021, manufacturers’ concerns about access to foreign exchange for critical materials needed for local production remain a lingering issue needed to address capacity utilisation.
Local manufacturers had explained that while the economy is beginning to recover from the shocks of the COVID-19 pandemic, operating challenges in the economy remain.
The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, had told The Guardian that the negative impact of the depreciation in Naira value and acute shortage of forex as huge challenges in the first quarter of 2021, adding that the situation calls for more intentional actions from the government with a focus on supporting productive activities to drive better performance in the remaining quarters of the year.
Latest trade data showed that the value of total trade in raw material stood at N711.8billion, accounting for 7.3 per cent of total trade. The import component was valued at N669.2billion while the export component stood at N42.7billion.
Urea, whether or not in aqueous solution, worth N16.8 billion was exported to Brazil, Leather further prepared after tanning, was exported to Spain and Italy, valued at N6.6billion and N1.0billion respectively. Cotton, not carded or combed, worth N1.9billion was also exported to Pakistan.x
In terms of imports, Cane sugar worth N88.9billion was imported from Brazil, mixtures of Odoriferous substance valued at N15.5billion and N8.0 billion were imported from Ireland and Swaziland, whole Milk preparation worth N18.4billion and N7.8billion were imported from Ireland and Malaysia during the period under review.
The value of manufactured goods trade in the first quarter of 2021 stood at N4.7 trillion representing 49.01 per cent of total trade. Out of this, the export component accounted for N250.4billion while the import component was valued at N4,532.4billion.
The products that drove up manufactured products were Helicopters of Unladen weight exceeding 2000kg which was exported to Ghana, at a value of N71.1billion. Vessels and other floating structures for breaking up were exported to the United Kingdom and Cameroon, worth N38.9billionandN17.6billion. Other products were Floating or Submersible drilling platforms exported to Equatorial Guinea, at a value of N39.5billion, and storage units worth N31.3billion exported to Ghana.
In terms of manufactured imports, other antibiotics were mainly imported from the Netherlands and India worth N329.2billion and N43.3billion. Used vehicles, worth N140.2billion, were imported from the United States. Motorcycles worth N30.98billion and N86.67 billion from China and India, and Machines for the reception…of voice, worth N75.1 billion and N21.8billion from China and Hong-Kong. Other imports under this category were parts of Machinery for working rubber or plastics worth N67.8billion imported from India.x
According to Ajayi-Kadir, the reported 3.40 per cent GDP growth rate of the manufacturing sector in Q1 2021 came as a surprise, given the numerous challenges facing the sector.
We are currently experiencing the rising cost of manufacturing inputs, so it is surprising to see a rate higher than the rate of 0.81 per cent in the first quarter of 2019 and 0.43 per cent in the first quarter of 2020 which were relatively stable periods.
“Incidentally, there is no recorded high level of economic activities in the sector that would justify such a growth rate in the quarter. Even the aggregate MCCI which increased to 49.1 points in the first quater of 2021 from 42.1 points in the fourth quarter of 2020 was still below the 50 neutral base points, which indicated that manufacturers only have a little more confidence in the economy”, he added.
He however reiterated the need for the government to intensify its intervention initiatives and follow through on the cost reduction aspect of ease of doing business, as there is an urgent need to create a friendlier operating environment and deliberately support the productive sector in a strategic manner.x
In Q1 2021, the value of total exports stood at N2,907.21 billion, representing 29.79 per cent of total trade. This value represented a decline of 8.99% against the level recorded in Q4 2020 and 29.26 % compared to Q1 2020.
Exports by section revealed that Nigeria exported mainly mineral products, valued at 2,486.1 billion, or 85.52% of the total export value. This was followed by Vehicles, Aircraft and parts (N180.5 billion or 6.21%) and vegetable products (N82.3billion or 2.83 per cent).
In terms of regional trade, Nigeria exported most products to Asia (N1,132.55 billion), Europe (N997.79 billion), America (N316.62 billion) and Africa (N449.84 billion). During the quarter, goods worth N282.2 billion were exported to ECOWAS. By country, most goods were exported to India (N488.1 billion or 16.8%), Spain (N287.2billion or 9.9 per cent), China (N190.1 billion or 6.5 per cent) and the Netherlands (N160.billion or 5.5 per cent).