Job conditions in Nigeria’s manufacturing sector hit 18-month high

Employment conditions in Nigeria’s manufacturing sector saw an improvement in the fourth quarter of last year owing largely to an increase in consumer demand, according to the latest aggregate Manufacturers CEO’s Confidence Index (MCCI). 

The index report published by the Manufacturers Association of Nigeria (MAN) revealed that employment conditions improved to 47.9 points, the highest since Q2 2023, from 45.7 points in the previous quarter. 

“Current business condition (48.3), current employment condition (47.9) and current production level (47.5) recorded improvement due to the moderate increase in consumer demand, especially during the festive period. However, the three current indices stood below the 50-point threshold as a result of the prevailing hostile macroeconomic environment,” it said.  

The MCCI is a quarterly research and advocacy publication of MAN that measures changes in the pulse of operators and trends in the manufacturing sector quarterly, in response to movements in the macro-economy and government policies, using primary data mined through direct surveys over 400 CEOs of MAN member-companies. 

It is computed using data generated on standard diffusion factors of current business condition, business condition for the next three months, current employment condition, employment condition for the next three months, and production level for the next three months. 

It has a baseline score of 50 points and scores above the baseline indicate improvement in manufacturers’ confidence in the economy, while an index score of less than the baseline suggests deterioration in the operating environment. 

The survey also revealed a tepid rise in Manufacturers’ confidence in the Nigerian economy. It grew to 50.7 points in Q4 from 50.2 points in Q3. The moderate improvement in the Aggregate MCCI is the first since Q1 last year. 

“Despite the prevailing macroeconomic and operational challenges embattling manufacturing companies in Nigeria, the CEOs remain resilient,” Segun Ajayi-Kadir, director general of MAN, said. 

Since the second quarter of 2023, households and businesses have been affected by reforms of President Bola Tinubu, a move done in the interest of the long-term health of the sickly economy. The harsh reality pushed some manufacturers to shut down increasing the unemployment landscape in the country. 

According to the Nigerian Bureau of Statistics, the unemployment rate in Africa’s most populous nation rose to 5.3 percent in Q1 last year from 5.3 percent in Q3 2023. 

MAN reported that the top 10 on the list of manufacturers’ challenges in Q4 include exorbitant electricity tariff hikes and high cost of alternative energy; high exchange rate and forex scarcity; high cost and shortage of raw materials; multiple taxation; government over-regulation and policy inconsistency. 

Others are high interest rates and low access to credit; poor road infrastructure and high cost of logistics; insecurity and political instability; low sales and low patronage by government agencies; and high inflation. 

“The challenges are clear. Therefore, macroeconomic reforms must involve actionable plans that take precedence over rhetoric. The President’s ambitious goal of taming inflation down to 15 percent and stabilising the naira at N1,500/$ must be pursued by clearly defined and easily assessable actions, with appropriate timelines,” the association said.