By Toye Olori
LAGOS, Oct 5 1999 (IPS)

Nigeria’s ailing manufacturing industry is struggling to find its feet, five months after the new civilian administration of President Olusegun Obasanjo assumed power.

Obasanjo, who was sworn-in in May as president, after 15 years of military rule, has pledged to revive Nigeria’s economy destroyed by years of corruption and mismanagement.

A new report by the Manufacturers Association of Nigeria says “no significant achievement has been recorded” in the ailing sector since the new government came to office.

The industry has been paralysed by “the energy crisis that resulted from erratic power supply and shortage of petroleum products beginning from 1997, (that) persisted throughout the period,” says the association in its appraisal of the 1999 Nigerian budget.

The association, in its report, published last week, says by January, the inflation rate had risen to 10.4 percent as against 6.4 percent in June and 8.3 percent in December 1998, eroding the objective of sustaining a single digit rate of inflation.

The half-yearly economic review, made available to IPS in the Nigerian commercial city of Lagos on Monday, says Nigeria’s economic situation was not helped by fiscal indiscretion that characterised the last five months of military administration of General Abdulsalami Abubakar.

“Massive government expenditure, which unfortunately was not directed to growth-inducing projects resulted in a whopping 250.98 billion Naira deficit in the first five months of the year,” the report says.

One US Dollar is equal to 94.88 Naira.

The report says the movement of funds from the Central Bank of Nigeria combined with fiscal deficit impacted negatively on the exchange rate, following the devaluation of the Naira, three times, between March and June 1999 by about 10 percent.

These unfavourable trends, coupled with worsened infrastructural constraints, according to the association, has had serious telling effects on the real sector of the economy which stultified growth in the sector, particularly manufacturing.

The survey shows that the sector was still in a distressed situation, with a large number of companies having closed shop because of high cost of operation and inability to sell their products.

However, overall capacity utilisation on the average showed a relative improvement during the period under review when compared with the performance in the first half of 1998.

While capacity utilisation stood at 27.83 percent in January to June 1998, average capacity utilisation rose by 2.97 percentage to 30.80 percent in the first half of this year.

The manufacturing sector recorded a shrinking level of nominal output during the period under review. At 16.406 billion naira, total nominal production was 46 percent lower than the level achieved in the first six months of last year.

The decline in manufacturing output during the period notwithstanding, unplanned inventory of finished goods stood at a high level of 3.04 billion naira. Compared with the figures of 3.6 billion naira and 5.8 billion naira in the first and second halves of 1998 respectively, the current situation could be regarded as a relative improvement.

The association believes that Nigeria has the potential to pull itself out of the valley of economic slump that has lasted for more than a decade.

“What is needed for enduring economic recovery and subsequent growth is good macro-economic management and strong infrastructural support services, as well as discipline”, it says.

The report notes that one of the major problems confronting industries in Nigeria is dumping of products and influx of fake and sub-standard products from abroad. The association calls for the re-introduction of pre-shipment inspection to check the influx.

At a launcheon organised by the association last week, the Minister of Industry, Lyorchia Ayu, expressed government’s determination to encourage production but blamed most manufacturing outfits for engaging more in importation than production.

Ayu said government had invested more than 800 billion Naira in the past few years, an exercise which, he said, has drained the treasury.

As a result, the government is, he says, planning to discourage import, which has cost the country over 1.1 trillion naira in the past ten years, by ensuring that the new tariff system favours the manufacturing sector.

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