Report: MAN CEO’s Confidence Index Records First Increase in 18 Months

Dike Onwuamaeze

The President of Manufacturers Association of Nigeria (MAN), Mr. Francis Meshioye, yesterday officially presented the MAN CEO’s Confidence Index (MCCI) report, which recorded its first increase in 18 months by marginally increasing by 1.7 points in the first quarter of 2024 (Q1’24) when it moved from 15.8 points in the fourth quarter of 2023 to 52.5 points in Q1’24.

The MCCI is an index constructed to measure changes in quarterly pulse of the CEOs of manufacturing concerns in relation to changes in government policies and movement in macroeconomic indicators.

The MCCI report said that “all the standard diffusion factors increased due to the positive effects of selective reforms and the consistent appreciation of the Naira in the greater part of the last month of the quarter by about 22 per cent and 28 per cent in the official and parallel markets respectively.

“This moderately reduced the cost of imported raw materials, machinery as well as imported duty payment during the latter part of the quarter” under review.

Commenting on the MCCI’s report, the Director General of MAN, Mr. Segun Ajayi-Kadir, said: “Interestingly, the report that we are presenting today confirms a moderate improvement in the Aggregate Index Score (AIS) evidenced by the meagre increase from 51.8 points to 53.5 points for the first time in the last six quarters.

“Notwithstanding, this performance shows that the manufacturing sector is set on the path of restoration and recovery, at least to the level recorded in Q3 2022 with the hope of improvement in the next quarter.

“This is further buttressed by mild performance recorded at the sectoral and zonal levels as well as the positive projections of confidence indices for the next quarter, even though emerging policies are pointing to the contrary and may imperil this positivity.”

Ajayi-Kadir said that this performance is attributable to the undying resilience of manufacturers, the reasonable gains recorded by the Naira in the latter part of the first quarter and the expectation of reasonable reduction in diesel price.

“Others include the hope that the presidential intervention funds for the manufacturing sector will be disbursed seamlessly, and the policy direction of the government will become clearer,” he said.

Meshioye, in his opening remarks, mentioned some of factors that could imperil the positive developments that were reported in the MCCI to include the critical decisions of Monetary Policy Committee of the Central Bank of Nigeria, which have far-reaching implications on the manufacturing sector.

He said: “The Nigerian economy has encountered significant challenges in recent years, including foreign exchange volatility, escalating energy costs, and food insecurity.

“These challenges have intensified inflationary pressures, adversely impacting consumers’ purchasing power and impeding the growth of the manufacturing sector.

“Consequently, production levels have declined, leading to reduced competitiveness within the industry.”

He, however, said that even though MAN acknowledged the efforts of the MPC and the reasons behind its decisions, “it is crucial for the committee to thoroughly assess the potential impact on the real sector and the multiplier effect on the nation.

He observed that the strategy of raising the Monetary Policy Rate (MPR) has persisted for nearly two years without yielding positive results and hoped that the CBN would explore alternative measures, particularly in addressing the underlying causes of inflation, primarily cost-push factors.

He, therefore, urged the MPC to carefully evaluate the effects of these monetary policy actions on both the manufacturing sector and the broader economy.   

MAN, therefore, suggested that the government should “implement targeted interventions aimed at mitigating the underlying cost-push factors driving inflation, thereby alleviating the financial burden on manufacturers.

“Prioritise forex and credit allocation to the manufacturers and fast track the proposed recapitalisation of the banking sector.

“Emphasise the development of infrastructure within industrial hubs and bolster nationwide investments in renewable energy sources to alleviate logistical expenses and enhance competitiveness.

“Further reduce the reliance of the country on imported products and raw materials by providing incentives for investment in backward integration and local sourcing to reduce the pressure on the dollar to the barest minimum.”