Manufacturers blame Q3 performance on slow budget implementation
The drop in manufacturing contribution to the gross domestic product (GDP) in the third quarter of 2017 has been attributed to slow implementation of this year’s budget.
Manufacturers say slow budget implementation in 2017 made it difficult for them to receive payments for contracts done, adding that it likewise hurt purchases and consumer spending.
“It was caused by the sluggishness in the implementation of the 2017 budget and the slow expenditure,” preliminary comments on Q3 2017 NBS report by Frank Jacobs, president of the Manufacturers Association of Nigeria (MAN), said.
In the 2017 3rd quarter report released recently by the National Bureau of Statistics (NBS), manufacturing sector real output growth was -2.85 percent (year on year), higher than the -4.38 percent in the same quarter of 2016 by 1.53 percent points and -3.49 percent points lower than the rate (0.64 percent) recorded in 2nd quarter of 2017. Real contribution to GDP in 2017 third quarter was 8.81 percent as against 9.04 percent contribution of the second quarter of 2017.
The biggest loser, according to this NBS, was the motor vehicle assembly sectoral group that regressed by 1.54 percent negative points, followed by the basic metal, iron and steel sectorial group that plummeted by 0.48 negative percentage points. Non-metallic sectorial group, particularly the cement sub-sector, followed closely as it regressed by 0.40 negative percentage points.
Jacobs said the general lull in business climate within the quarter hit manufacturers hard.
The 2017 budget dragged till the second half of the year, holding many manufacturers who supplied their products or did contracts for government.
Steel makers say low patronage across the country is hurting them and cropping investments in the sub-sector.
One steel maker said when patronised, they are owed by governments at various levels for between three and six months.
“The manufacturing sector at the moment still requires stable and adequate enabling environment, a reliable policy support systems that would effectively address existing familiar challenges like inadequate power and dearth of basic infrastructure prevalent in the sector,” Jacobs said.
“Government therefore needs to rise up to the occasion by further deploying strategic synthesis of fiscal and monetary policies, further make the operating environment friendlier, enhance the purchasing power of average Nigerians, further support the manufacturing, agriculture, telecom and oil with comprehensive and integrated support system that would guarantee meaningful growth,” he added.
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