Nigeria's manufacturing slips for third consecutive month

Nigeria's manufacturing sector has been facing significant challenges, with the Central Bank of Nigeria's Purchasing Managers' Index for the month of March showing a decline at 47.7 points for the third consecutive month. However, the decline in the sector appeared to be at a slower rate. To shed light on the state of Nigeria's manufacturing sector, CNBC Africa spoke with Shagan Ajayakadir, the Director-General of the Manufacturers Association of Nigeria. Ajayakadir discussed various issues plaguing the sector and the potential opportunities for growth. One of the key points raised in the interview was the allocation of foreign exchange (forex) to the manufacturing sector. Ajayakadir expressed concerns about the lack of compliance by commercial banks in allocating the mandated 60% of forex to manufacturers for the purchase of essential inputs like raw materials and machinery. While the initial policy was seen as a relief for the sector, the subsequent withdrawal of the allocation created further challenges for manufacturers. Ajayakadir emphasized the need for a special FX allocation window to meet the demands of the manufacturing sector and boost capacity. Another critical issue discussed was the exclusion of 41 items from the CBN's FX window, which impacted industries that heavily rely on these raw materials. Ajayakadir advocated for the reinstatement of essential raw materials on the list to support industries facing supply chain disruptions. He highlighted the importance of consultation and collaboration to prevent further disruptions and ensure the stability of the manufacturing sector. Ajayakadir also addressed the importance of supporting local production and the 'Buy Nigeria, Made in Nigeria' campaign. While acknowledging some progress in getting locally produced goods on supermarket shelves, he emphasized the need for increased government support and adherence to the philosophy of promoting locally made products. Ajayakadir underscored the role of government agencies in driving the campaign and emphasized the potential impact on domestic manufacturing. In the face of challenges such as power issues and high-interest rates, Ajayakadir highlighted the resilience of the manufacturing sector and its efforts to innovate and overcome obstacles. The Manufacturers Association of Nigeria has been exploring solutions like developing power generation capabilities and advocating for government intervention in the power sector to enhance competitiveness. Overall, the conversation with Shagan Ajayakadir provided valuable insights into the challenges facing Nigeria's manufacturing sector and the opportunities for growth and development. As stakeholders continue to navigate the complexities of the sector, collaboration, policy support, and a focus on local production are essential to drive sustainable growth and enhance the sector's contribution to the economy.