Nigeria: Manufacturing Sector Struggles Despite Govt’s N1trn Grant


The impact of the one-year-old COVID-19 on the Nigerian economy, especially the manufacturing sector and households, came to the fore yesterday as major stakeholders reviewed the industry performance during the period.

In separate interviews with LEADERSHIP Friday, leaders of the Manufacturers Association of Nigeria (MAN) and the Lagos Chamber of Commerce and Industry (LCCI) said the sector was yet to recover from the shocks it suffered from the pandemic.

They confirmed that most of their members benefited from the N1trillion the federal government disbursed to refuel the economy but lamented that the serious decline in consumption of goods by households, increase in production cost, closure of companies and job losses impaired the sector.

According to the Bi-Annual Review of the Economy report by MAN, manufacturing capacity utilisation edged up to 53.7 per cent in the H2 of 2020 from 43.2 per cent recorded in the H1 of the year, indicating 8.5 percentage point increase over the period.

It however declined by 5.74 per cent compared with 59.44 per cent recorded in the corresponding half of 2019.

Also, capacity utilisation in the sector averaged 49.5 per cent in 2020 as against 56.8 per cent recorded in 2019.

The uptick in capacity utilisation in the period is attributed to the relaxing of the COVID-19 containment measures, particularly the opening of the economy for business activities in the 2nd half 2020.

The increase is also seasonally influenced as a result of Christmas celebration boosted economic activities in the last quarter of the year.

Similarly, manufacturing production value declined to N2.36 trillion in the H2, 2020 from N7.38 trillion recorded in the corresponding half of 2019, indicating N5.02trillion decline over the period.

Utilisation of local raw-materials by manufacturers in the H2, 2020 declined to 56.5 per cent as against 64 per cent recorded in the corresponding half of 2019, indicating 7.5 percentage point decline over the period.

The report added that the inventory of unsold finished manufactured goods increased to N303.22billion in the H2 of 2020 from N202.16billion recorded in the corresponding half of 2019, indicating N101.06 billion or 50 per cent increase over the period, while manufacturing investment totaled N118.52 billion in 2020 as against N496.11 billion achieved in 2019.

Manufacturing investment declined in the period following the depressing fallouts from COVID-19 that gave no impetus for new investments in the sector.

MAN further said 3,451 new manufacturing jobs were created in the H2, 2020 compared to 10,735 jobs created in the corresponding half of 2019 and 5,241 jobs in the H1 of the year.

However, a total of 3,903 jobs were lost in the sector in the period, marking two successive negative net job in the sector as job loss out-numbered new jobs created by the time the sector is recording negative net jobs, beginning from the H1 of the year.

Commenting on the development, MAN president, Mansur Ahmed, told our correspondent that the year 2020 was a very difficult year for the economy and manufacturing sector due to the onslaught of COVID-19 pandemic.

He said, “COVID-19 had a staggering devastation on global economies as evident in the huge death toll of manpower; the crashing of crude oil price, the slowing of global supply and demand; and the total halting of economic activities through the lockdown.”

According to Ahmed, the pandemic had a crushing impact on the manufacturing sector as the sector fell into economic recession in the third quarter (Q3) of 2020.

“At the moment and following the impact of COVID-19, productivity in the sector is at the lowest and therefore requires deliberately orchestrated action to rekindle significant productive activities in the sector,” he added.

For the manufacturing sector, the director-general of Lagos Chamber of Commerce and Industry (LCCI), Dr Muda Yusuf, said it has been challenging, noting that at the peak of the pandemic there was a very serious interruption in the supply chain as many could not get their inputs to come in and machineries were a major destruction.

He added that the pandemic led to a major problem with foreign exchange and because most of the manufacturing sector operators are highly import dependent for raw materials and many other inputs, the effect of COVID on the inflow of foreign exchange seriously affected the manufacturing sector over the last one year.

He stated: “Due to these challenges, some of the manufacturing companies have to fold up or scale down their operations, which naturally led to job losses. Also, purchasing power is weak because there is high unemployment; the level of poverty was high, among others.”

“The federal government during the period rolled out about N1 trillion to support the economy generally, most of the beneficiaries were actually from the manufacturing sector.

“The Central Bank also ensured that there was an interest rate concession to cushion the effect of the crisis in the manufacturing and agriculture sector. The agric sector was affected majorly by the lock down at the peak of the COVID due to no movement, agricultural products could not get to the market and they are perishable products and the farmers have to suffer the losses.

“All so, some of the inputs for agriculture were very high, fertiliser, agro chemical and agric machineries and equipment became expensive due to exchange rate.”

83% Households Reduced Food Consumption, Says NBS

Meanwhile, a data released by the National Bureau of Statistics (NBS) yesterday on impact of COVID-19 in Nigeria showed that households are still adopting potentially harmful coping strategies in response to shocks, with 58 per cent of households that were hit by a shock between July 2020 and December 2020 reducing their food consumption in response.

The report titled, “COVID-19 Impact Monitoring”, covered between November and December 2020.

The NBS report revealed that households continued to experience severe shocks as the COVID-19 crisis persisted since March 2020.

Between July 2020 and December 2020, 83% of households reported an increase in the price of major food items that they consumed, demonstrating a widespread deterioration in purchasing power.

“This builds on the rise in prices already observed between mid-March 2020 and July 2020. Notwithstanding the increased share of crop farming households that used farm inputs in the 2020/21 agricultural season, around 63 per cent of households also reported that prices of farm and business inputs increased between July 2020 and December 2020. Nevertheless, the prevalence of some shocks has waned as the crisis has drawn on. For example, between mid-March 2020 and April/May 2020, 36 per cent of households experienced the closure of a non-farm business, but this share had halved to 18 per cent by the period covering July 2020 to December 2020.

“While rising food prices may help net producers, food price shocks continue to hit consumers, along with many other types of shocks: around 83 per cent of households reported an increase in the price of major food items that they consumed.

“The share of respondents who were working remained around pre-crisis levels in December 2020, although persistent churning in the non-farm enterprise sector suggests that some businesses are yet to fully stabilize”, the report noted.

The NBS report disclosed that Agriculture has become an even more important income source, with the share of households participating in crop-related farm work rising from 70 per cent to 80 per cent between the 2019 and 2020 agricultural seasons.

More crop farming households are using farm inputs, and are positive about their revenues from crop sales in 2020/21 compared to previous agricultural seasons, potentially due to rising food prices.

Meanwhile, industry stakeholders stated that the country’s recovery prospects in 2021 will be dependent on four key factors including; effective management of the pandemic locally and globally; widespread vaccine rollout; direction of global oil market; and quality of fiscal, monetary, trade and regulatory policies.

According to them, accelerating the pace of economic recovery requires fiscal and monetary authorities to be well coordinated to promote growth-enhancing and confidence-building policies that would encourage more private capital inflows into the economy. Investment-led growth strategy, they said, is critical for inclusive and sustainable economic growth, adding that strong commitment to key reforms will not only boost output recovery but will also put the nation on a path of macroeconomic stability.

There is no doubting the underlying effects of the COVID-19 pandemic to the manufacturing sector.

With non-essential factories ordered to be closed to control the spread of the virus, companies are forced to cut costs and reduce their productive capacity, thereby, causing another level of disruption to supply chains.

COVID-19, a pandemic that began in Wuhan China spread across the world, decapitating global economies as evident in the record death toll of manpower, the crashing of crude oil price, the slowed global supply and demand, and the total halting of economic activities at the highpoint of the period.

The first confirmed case in Nigeria was announced on February 27, 2020. The country commenced its first lock down on March 30, 2020 in Lagos, Abuja and Ogun State.

Countries across the globe including Nigeria, grappled with the health and economic impact of the coronavirus pandemic.

In Nigeria, the period was characterised by imposition of lockdowns, curfews and other containment measures, volatility in commodity (oil) prices, subdued external demand, social tensions, EndSARS protest, heightened insecurity, forex liquidity concerns, Ports crisis, subdued business activities, contracting disposable incomes, business disruptions and investment uncertainties.

More Governors Receives Jabs, Flag Off Vaccination Exercise

Meanwhile, more state governors yesterday received vaccine jabs as they flagged off the vaccination exercise in their respective states.

Others also received the vaccine sent to them by the federal government in a nationwide exercise that commenced last week.

In Katsina State, the governor, Aminu Bello Masari inaugurated the COVID-19 vaccination exercise with himself and his deputy Mannir Yakubu being the first to receive the vaccine at Government House.

Governor Masari called on residents of the state to receive the vaccine without any form of doubt, adding that the vaccine is safe and should be embraced by all.

In Adamawa state, Governor Ahmadu Fintiri was administered with the vaccine at the Specialist Hospital Yola signaling the commencement of the state wide vaccination.

Borno state government yesterday began its COVID-19 vaccination campaign with frontline workers who received their vaccination at the Maiduguri Nursing Home.

Prof Ibrahim Kida, a professor of infectious diseases and head of isolation centre at the University of Maiduguri Teaching Hospital (UMTH), was first to be administered before Prof .Maryceline, a Professor of medical virology and head of COVID-19 laboratory UMTH took her own administration of theOxford-AstraZeneca COVID-19 vaccine, while other health workers filed out to take their turns.

Speaking during the launching, the deputy Governor of Borno State, Usman Umar Kadafur, said the reason for starting with the health workers is because of their exposure to the COVID-19 treatment centres.

Ebonyi State governor, Chief David Umahi; his deputy, Kelechi Igwe, their spouses, members of the State Executive Council and local government council chairmen yesterday received the COVID -19 vaccination less than 24 hours after taking delivery of the vaccine.

Abia State governor Okezie Ikpeazu yesterday took his first dose of the Oxford AstraZeneca COVID-19 vaccination, urging the residents to register and be vaccinated also.

His personal physician, Dr. Mike Enyinnaya vaccinated him at the Government House, Umuahia the capital in the presence of some administration officials and his aides.

Meanwhile, Zamfara State government has received a total of 55920 doses of COVID-19 vaccines alongside a number of other accessories, including syringes, septic boxes and packages of cotton.

Receiving the items in Gusau, the Zamfara State capital, Health Commissioner, Alhaji Yahaya Abubakar, said the vaccination exercise will commence soon with the vaccination of the State Governor, Bello Mohammed Matawalle.

Also, Sokoto State government has taken delivery of 68,66 doses of the Oxford-AstraZeneca COVID-19 vaccines from the Federal Government.

In Gombe, the state government has received delivery of its share of AstraZeneca COVID-19 vaccine doses, enough to cover 35,000 individuals slated for the first phase of the vaccination exercise in the State, including frontline workers and others.

The state commissioner of Health, Dr Habu Dahiru, stated this while briefing Journalists on the receipt of the vaccine consignment and preparations by the state government as well as other development partners to ensure a hitch-free exercise when it gets underway.

According to the Health commissioner, the first phase of the vaccination doses will be administered on frontline health workers in public and private health facilities, rapid response and contact tracing teams as well as military and paramilitary organisations.

He said the second phase will be administered on aged persons from 50 years and above while the third phase will be given to individuals with significant co-morbidity like asthma, hypertension and other chronic conditions.

The fourth phase, he noted, will involve individuals at risk of contracting diseases.

Dahiru said to ensure the success of the vaccination, a ‘train the trainers’ workshop is underway at the state level and is expected to be cascaded to the local government areas for effective coverage.

He said those to administer the vaccines must be health workers who are certified to give injection and will be trained on the side and method of administration of AstraZeneca.

The Delta State government also took delivery of its share of 85,700 doses of AstraZeneca COVID-19 vaccine from the federal government.

Briefing journalists yesterday in Asaba, Dr. Ononye Mordi, the state commissioner for Health, said the receipt of the vaccine was unique and symbolic as it would herald the commencement of a statewide vaccination exercise against COVID-19.

Kano state governor, Abdullahi Umar Ganduje, was yesterday vaccinated against COVID-19 at Murtala Muhammad Specialist Hospital, Kano.

The vaccine was administered on him by his personal physician, Dr Fakhraddeen

Yahaya Muhammad, in the presence of some members of the State Executive Council, representative of Kano Emirate, frontline health workers, a select of development partners and other critical stakeholders.

Experts Differ On Safety Of AstraZeneca Vaccine As Denmark, Iceland, Norway Suspend Use

Meanwhile, health experts in Nigeria yesterday expressed divergent views over safety of the Astrazeneca vaccine after some countries suspended the use of the vaccine.

Denmark said it will not use the AstraZeneca COVID-19 vaccine for two weeks after reports that some recipients had developed serious blood clots, and in one case may have died as a result.

That country’s authorities did not say how many reports of blood clots there had been, but Austria, Norway, Iceland and others have stopped using a batch of AstraZeneca shots while investigating a death from coagulation disorders and an illness from a pulmonary embolism.

But speaking in defence of the vaccine, president of Pharmaceutical Society of Nigeria (PSN), Pharm Sam Ohuabunwa, told LEADERSHIP Friday that every drug has potential risk and that the human body response to drugs in one way or the other, resulting in some kinds of reactions.

He also said, “This particular vaccine like every other vaccine is still new and we are evaluating its efficacy vis-a-vis its adverse or deleterious response. You know that for any drug to be used on humans, it has gone through a test. The oxford- AstraZeneca vaccine has been approved, meaning that including these nations that are reporting now, they have looked at all the trials that were done and know that the drug has been regarded as safe but that does not mean that individual reaction may not occur probably from what we are seeing now.

“So what every country is doing now is recording and seeing if it is repetitive, if it is isolated and the extent of the adverse effect.