Nigeria’s manufacturing sector is on the road to recovery, here’s why
Investment banking group, FBN Capital has indicated through its Purchasing Managers Index (PMI) that Nigeria’s manufacturing sector may be recovering soon. The PMI as described by FBN Capital, takes the temperature of Nigeria’s manufacturing sector as an indicator of the economic health of the manufacturing sector.
FBN Capital PMI reports that headline reading rose to 51.6 percent from 49 percent for September 2015, which shows a steady recovery of business activities and confidence in the manufacturing sector, while forecasting a modest improvement in the final quarter.
As indicated in the report, Nigeria’s manufacturing sector has previously experienced a shortfall, however, while announcing huge 2015 profits, the National Cashew Association of Nigeria (NCAN) told the News Agency of Nigeria (NAN) that current global market trends showed an increase in demand for cashew.
Cashew processing will further boost the sector following the commitment expressed by NCAN to rejuvenate cashew plantations and increase the area of land under cashew production in the country. In February 2015, NCAN signed a $5 million export deal with shipping companies to export 6,700 containers of cashew nuts to Vietnam, India and other Asian countries.
Also, in the last year, Nigeria’s pharmaceutical manufacturing sector has remained focused on the growth and expansion of drug manufacturing within the country. The sector has invested $300 billion in machinery and quality upgrades as a way to end drug importation. Managing Director of Evans Medical and West African Pharmaceutical Manufacturers Association president, Bunmi Olaopa, said due to the upgrade of pharmaceutical companies in Nigeria, many manufacturers are presently elevating the standards of their factories, while others are on the lookout for partners. “Many more in Nigeria and Ghana are also in the process of acquiring pre-qualification. So, the issue of low quality of drugs is now over,” she stated.
The report also notes that the reading in the manufacturing sector picked up from 47 in August to 52 in September 2015. In sustaining a boost in the manufacturing sector, the report describes a shift in focus towards light manufacturing such as textiles, apparel and footwear, which could boost job generation because of Nigeria’s comparative advantages. FBN Capital suggests government policies to encourage a more business-friendly environment for private sector participants including foreign investors within the made-in-Nigeria initiative.
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