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Manufacturers lament as cost of shipping jumps to 33.5%

The Manufacturers Association of Nigeria has raised concerns as the cost of shipping rose further to 33.5 per cent in the fourth quarter of last year.

The association, in its MAN CEOs Confidence Index report for Q4 2021, said production and distribution costs increased by 0.4 per cent in the period from 20 per cent in the third quarter.

“However, the marginal increase in the period suggests that production and distribution cost are beginning to stabilise following the easing up of COVID-19 pandemic,” it said.

It said capacity utilisation fell further by two per cent in the quarter under review, compared to three per cent in Q3, while volume of production declined further by 1.7 per cent as against four per cent in the preceding quarter.

The report said, “Manufacturing investment dipped further by 0.2 percentage points in the quarter under review from 4.0 per cent decline recorded in the preceding quarter. 15 per cent decline recorded in the second quarter of the year.

“Employment declined further by 6.0 percentage point in the fourth quarter of 2021 from 5.0 per cent decline recorded in the third quarter of the year. Sales volume increased by 7.3 percentage points in the quarter under review from seven per cent decline recorded in the preceding quarter.

“Cost of shipping increased further by 4.5 percentage points in the fourth quarter of 2021 from 29 per cent recorded in the third quarter of the year.”

MAN said the movement in the key manufacturing sector indicators showed that the macroeconomic environment was gradually improving.

“However, there is still the challenge of employment in the sector while the cost of shipping is still high and escalating.  It is therefore imperative that government should evaluate the current processes for allocation of available forex to ensure it is allocated to the productive sectors of the economy, particularly at official rate for importation of raw materials and machines that are not currently produced or available in the country,” it said.

According to the report, the ranking of issues by CEOs in order of intensity include high cost of local and imported raw materials, insecurity within the industrial areas, shortage of skilled manpower, high cost of transportation, inconsistency in government policies and foreign exchange difficulty.

The association recommended that the government should further incentivise investment in the development of raw materials locally through the backward integration and resource-based industrialisation initiatives.

“Government should call for more investors to key into these initiatives with appropriate and definite incentives. For instance, there is need for urgent investment and production of Active Pharmaceutical Ingredients in the country; investment and production of machines; iron and steel; petrochemical materials, etc. to support manufacturing activities,” it said.

MAN also recommended that the government should give specific attention to the security of life and investment in industrial areas; and properly delineate and upscale security infrastructure in the various industrial areas in the country, particularly in the northern part of the country, for priority attention.

“Government should also quickly invest in modern security such as drones, cameras, etc. for robust monitoring of the areas,” it said.

It said the government should ensure effective allocation of available forex to productive sectors, particularly the manufacturing sector for importation of raw materials and vital machine and equipment that are not available locally.

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