A total of N9.28tn was spent on the importation of manufactured goods into Nigeria from January to September 2020, the latest data from the National Bureau of Statistics have shown.
Manufactured goods imports into the country rose significantly in the third quarter of last year as the manufacturing sector was hard hit by the COVID-19 disruptions, border closure and foreign exchange scarcity.
The sector contracted in the six months to October amid the economic fallout of the pandemic.
Although it snapped out of the doldrums in November, the sector shrank again in December, according to the Central Bank of Nigeria’s Purchasing Managers’ Index Survey Report.
The manufactured goods imported into the country in Q3 were valued at N3.83tn, up from N2.78tn in Q2 and N2.66tn in Q1, according to the NBS.
Manufactured goods imports increased in value by 23.18 per cent in Q3 compared to Q2 and 23.47 per cent year-on-year.
The Director-General, Manufacturers Association of Nigeria, Mr. Segun Ajayi-Kadir, said this week that 2020 was quite a bad year for manufacturing business in Nigeria.
He said the disruption caused by the COVID-19 lockdown and the challenge of insecurity severely limited food production and movement of food across the country.
The Lagos Chamber of Commerce and Industry, in its economic review for 2020 and outlook for 2021, noted that the manufacturing sector was faced with several structural challenges, with adverse impact on growth performance.
It said the sector had been struggling with growth in recent years due to tough operating conditions in the local business environment and had made most industry players less competitive in the domestic and regional markets.
According to the LCCI, lingering forex crisis was perhaps the most significant challenge for the sector in 2020 as most industry players found it increasingly difficult to access forex meant for importation of critical factor inputs.
It said the reopening of the land borders should provide succour to the manufacturing sector ‘even as the kick-off of African Continental Free Trade Area serves as avenue for manufacturers to penetrate new African markets’.
“However, critical challenges such as forex scarcity, inconsistent forex policies, inefficient transport infrastructure, high production cost, weak consumer demand and the new competitiveness pressure foisted by the AfCFTA may dampen the recovery prospects of the sector in year 2021,” the group said.
According to the LCCI, the low interest environment in the money market favours big manufacturing players in terms of raising cheap capital but the business environment will remain challenging for manufacturing small and medium enterprises.
It said, “In our view, credit flows to the manufacturing sector will fail to achieve desired outcomes without putting in place measures to address structural bottlenecks in the ports and customs processes and other policy challenges to productivity.
“Thus, we see growth of the manufacturing sector being subdued in the near to medium term.”