The Manufacturers Association of Nigeria (MAN) has expressed concern over the prolonged delay in the commencement of operations at the Ajaokuta Steel Company and the Aluminum Smelter Company, citing its negative impact on investor confidence in the country’s iron, metal, and steel industry.
Declining Confidence in the Steel Sector
According to the Manufacturers CEO Confidence Index (MCCI) report for Q4 2024, the Basic Metal, Iron & Steel sub-sector recorded a drop in confidence levels, declining from 58 points in Q3 to 57 points in Q4. The report attributed this dip to the continued reliance on imported metal materials, making local manufacturers vulnerable to foreign exchange fluctuations.
“The prolonged delay in the take-off of these key industrial projects has left operators in the Basic Metal, Iron & Steel Sectoral Group heavily reliant on imported metallic materials, making them highly vulnerable to the adverse effects of foreign exchange volatility,” the report stated.
Challenges in Other Sectors
The report also highlighted struggles in the Electrical & Electronics sector, where declining consumer purchasing power and rising electricity tariffs have led to reduced demand for household electrical appliances. Confidence in this sector dropped from 52.5 points in Q3 to 51.3 points in Q4.
Similarly, the Non-Metallic Sectoral Group recorded a decline due to rising energy costs, forex losses, and the expiration of tax incentives in the cement industry. Confidence in this sector dropped from 57.6 points in Q3 to 50.2 points in Q4, despite the government’s push for infrastructure development.
Positive Growth in Plastic, Rubber, and Wood Sectors
Despite challenges in steel and electronics, the Plastic & Rubber and Wood & Wood Products sectors showed notable improvement.
- The Domestic/Industrial Plastic & Rubber sector saw a 3.3-point increase, rising from 48 points in Q3 to 51.3 points in Q4, due to the expansion of recycling hubs.
- The Wood & Wood Products sector gained 3.2 points, moving from 48 to 51.2 points, driven by rising furniture demand and the lifting of the export ban on processed wood.
Other Sectors Show Mixed Performance
The following industries recorded varied confidence levels in Q4 2024:
- Pulp, Paper, and Printing: Increased from 51.5 to 52.9 points, driven by growth in digital publishing.
- Chemicals & Pharmaceuticals: Slight increase from 50.5 to 50.8 points, attributed to stable drug prices and local production growth.
- Food, Beverages & Tobacco: Jumped from 47.5 to 50.3 points, benefiting from increased tourism and festive season sales.
- Textile, Apparel & Footwear: Improved from 44 to 46.8 points but remained below the 50-point benchmark due to smuggling and foreign competition.
- Motor Vehicle & Miscellaneous Assembly: Slightly improved from 44.0 to 44.8 points but remained below the confidence threshold.
Conclusion
The report underscores the urgent need for the Federal Government to fast-track the Ajaokuta Steel Company’s takeoff and implement policies to boost local manufacturing. While some sectors recorded improvements, key industries remain constrained by infrastructure delays, forex volatility, and policy uncertainties.
