Life is gradually returning to the real sector as manufacturing and small business see an uptick, on the back of government intervention programmes in 2016 and the first four months of 2017.
The policy of the Central Bank of Nigeria (CBN) in August 2016 allocating 60 percent of available foreign exchange in the market to manufacturers, revved up capacity utilisation in the sector, from 50 percent in 2015 to 52 percent currently, according to the Manufacturers Association of Nigeria (MAN).
The positive trickle-down effects of the concessionary FX allocation policy in 2016 also forced manufacturers to draw up investment, expansion, production and export plans for 2017 with bigger expectations of improvement in production.
Similarly, improved dollar allocation to large-scale manufacturers, saw the Purchasing Manager’s Index (PMI) move from 48.2 index points in January to 51.1 percent in April 2017, indicating expansion in the manufacturing sector, after three months of contraction.
“Things have improved from what we saw before. It is of course driven by the foreign exchange policy of the CBN, but we still have a long way to go,” said Frank Udemba Jacobs, president of MAN.
Also, small and medium enterprises (SMEs) trading with dollars, are heaving a sigh of relief, as the new CBN window guarantees them at least $20,000 every quarter.
SMEs who spoke with BusinessDay, believe that if they can have access to $80,000 in 12 months, they could fire up productivity and create more jobs.
“What it means for us is that we now plan and make educated forecasts. For some of us, this policy is keeping us in business and retaining our staff strength,” said Ike Ibeabuchi, MD of medium-scale MD Services Limited.
Africa’s most populous country was hard hit by oil price crash, which forced policy makers in one of the world’s biggest oil producers to think inwardly.
The current administration came up with a new policy on rice production, known as Anchor Borrowers Scheme, which has already moved up local production to four million tons.The programme has already engaged about 200,000 Nigerian farmers.
“Before now, our paddy production was five million metric tons, which could give three million metric tonnes of milled rice. Now, I think we are producing about six to seven million metric tons. Currently, Nigeria is hitting about 52 percent recovery in paddy production. We have opened up unused flood plains to dry season cultivation in Kebbi, especially in Niger marginally, Taraba and Jigawa,” Rotimi Fashola, senior partner, OIT Fash Consult, told BusinessDay.
The focus of the government has shifted to increased production of crops such as cashew, cocoa and sugar cane, among others.
Some SMEs in light manufacturing, have also seen an improvement in the patronage of their products on the back of government campaigns and foreign exchange crisis.
“Nigerians now buy more of locally made shoes,” Afolabi Oluwaseun, CEO of Marv G. Designs, a shoe-making outfit, said.
“This is even the best time, because we are at an advantage at the moment. Most people that did not have confidence in home-made brands before cannot now afford the so-called foreign-made brands. The interesting thing is that we even make better quality products than the so-called imported brands,” Oluwaseun told BusinessDay.
ODINAKA ANUDU
