The Manufacturers Association of Nigeria (MAN) says the moderate growth in the nation’s Gross Domestic Product (GDP) output calls for more deliberate actions by government that would drive the growth further in the remaining quarters of 2021.
MAN’s Director-General, Mr Segun Ajayi-Kadir made this known while reacting to the National Bureau of Statistics’ (NBS) first quarter of 2021 GDP report, in Lagos.
According to the report, the nation’s GDP rose from 0.11 per cent in the fourth quarter of 2020 to 0.51 per cent in first quarter of 2021, translating to a 0.40 per cent increase.
Ajayi-Kadir noted that the increase indicated the Nigerian economy was beginning to recover from the shocks of the COVID-19 pandemic, albeit with the other operating challenges in the economy.
The reported result may possibly mark the beginning of a tortuous journey back to the path of recovery and meaningful growth.
He, however, said the 0.40 per cent growth rate differential was moderate and caution must be applied, as this performance when examined in the mirror of 2019 results showed below par growth rate.
The MAN director-general added that the reported 3.40 per cent growth rate of the manufacturing sector in first quarter of 2021, came as a surprise giving the numerous challenges faced by the sector.
He argued that there was no evidence of the high level of economic activities in the sector that would justify such a growth rate during the quarter.
“We are currently experiencing rising cost of manufacturing inputs, negative impact of Naira depreciation, shortage of forex, so it is surprising to see a rate higher than the rate of 0.81 per cent in Q1 2019 and 0.43 per cent of Q1 2020 which were relatively stable periods.
“Incidentally, even the aggregate Manufacturers CEOs Confidence Index (MCCI) which increased to 49.1 points in Q1 2021 from 42.1 points in Q4 2020, was still below the 50 neutral base points, which indicated that manufacturers only have a little more confidence in the economy.
“This means it will amount to error of judgement to ascribe better performance by comparing Q1 2021 with Q4 2020, a year like no other that was heavily challenged by COVID-19 and a period that growth was largely driven by full easing of lockdown, seasonal and festive driven demand for goods and services. Let us compare the 0.51 per cent growth rate of Q1 2021 with the 2.1 per cent of Q1 2019, a relatively stable economic period.
“When this is done, it will be clear that the 0.51 per cent reported growth rate is low, even though a positive and reassuring trend.
“It shows that the economy is picking up and points to the gradual but steady recovery stance of the economy,” he said.
The director-general stressed that the prevailing economic circumstances and the struggling state of manufacturing were worrisome, while urging government to intensify its interventions and follow through on the cost reduction aspect of ease of doing business.
“There is an urgent need to create a more friendly operating environment and deliberately support the productive sector in a strategic manner by setting priorities along the lines of improved infrastructure, competitiveness and stronger industrial linkages,” he said.