The Manufacturers Association of Nigeria has said that the difficulty in sourcing forex for importation of raw materials and machines that are not locally available had been a critical challenge to the manufacturing sector.
Speaking on its Manufacturers CEOs Confidence Index for second quarter 2021, released during the week, the Association however called on the Federal Government to ensure that adequate foreign exchange (forex) is allocated to the manufacturing sector through a preferential arrangement to enable the sector to import raw materials and machinery that are not produced in the county.
According to them, since the onset of the COVID-19 pandemic in the first quarter of last year, the severity of the forex challenge had intensified, particularly as the value of the naira deteriorated.
MAN lamented that even with the gradual return to normalcy of business activities and the recovery of forex earnings as crude oil prices improved, acute shortage of forex persisted.
In addition, the Central Bank of Nigeria has consistently intervened in the forex market (official and BDC windows), but the result has been negligible, particularly in the second quarter of 2021.
“It is therefore critically important that government reviews its foreign exchange management procedures to ensure that all available forex are productively deployed into the economy, MAN said, in its ‘Manufacturers CEOs Confidence Index for second-quarter 2021, released during the week and made available and obtained by our correspondent.
MAN uses the MCCI as a barometer to garner the perceptions of CEOs of manufacturing companies on changes in the economy.
The imperative 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.
MCCI also gauges changes in key macroeconomic indicators including sector-specific factors that represent government activities and policy measures in the economy.
Consequently, the effects of movements in forex, lending rate, credit to the manufacturing sector and capital expenditure of the government were also measured.
In addition, it gauges the outcome of changes in business operating environment factors which include over-regulation, multiple taxes/levies, access to seaports, local raw-material sourcing, government patronage of manufactured goods and inventory of unsold manufactured products.
MAN said in the second quarter of the year, based on the MCCI, the normalcy and tranquillity seen in the economy in the first quarter of the year were sustained, as business activities increasingly rebounded from the hangover of the COVID-19 pandemic.
“This is corroborated by the increase in MCCI scores for the second quarter of the year to 52.9 points, from 49.1 points recorded in the first quarter. The index score of 52.9 points in the quarter under review was the first it stayed above the 50 neutral points since the first quarter of 2020,” the report said.