The Purchasing Managers Indexes (PMI) indices released by the Central Bank of Nigeria (CBN) and FBN Quest, show that manufacturing industries are getting more raw materials now than in 2016.
The CBN PMI, released yesterday, shows that raw materials inventory index in July 2017 stood at 53.6 points, compared with 52.3 in June, an upward movement for the fourth consecutive month.
The CBN manufacturing PMI index shows that the manufacturing sector expanded to 54.1 points in July, as against 52.9 in June.
FBN Quest, on the other hand, puts its manufacturing PMI in July at 56.3 points, as against 55.9 in June.
FBN Quest data, compiled by NOI Polls, show that since March this year, the CBN has stepped up its sales of FX to importers, SMEs and retail (for invisibles).
“Two positive consequences for the sector have been far greater availability of raw materials and naira appreciation. The food and beverages segment has been the main beneficiary,” FBN Quest said.
Confirming the development, Frank Udemba Jacobs, president of the Manufacturers Association of Nigeria (MAN), told BusinessDay by telephone, that there is an improvement in the manufacturing sector because foreign exchange is readily available and the $20,000 window opened for SMEs is also yielding results.
“What manufacturers are saying now, is that more foreign exchange should be allocated to the sector. This is because the narrow gap between the official rate and the bureau de change rate is prompting many importers to once again return to the importation of cheaper but inferior products,” Jacobs said.
The PMI measures the growth or otherwise, in sub-sectors in manufacturing each month.
The CBN PMI shows 11 of the 16 subsectors recorded growth, two saw no change, while three subsectors recorded decline in raw materials inventory.
Subsectors that recorded growth include appliances and components; computer and electronic products; cement; primary metals; chemical and pharmaceutical products; food, beverage and tobacco products; textile, apparel, leather and footwear; printing and related support activities; paper products; electrical equipment and transportation equipment.
The remaining five subsectors declined in this order: petroleum and coal products; fabricated metal products; furniture and related products; non-metallic mineral products and plastics and rubber products.
The production level index for the manufacturing sector grew for the fifth consecutive month in July 2017. The index at 59.3 points, indicated an expansion in production at a faster rate, when compared to the level recorded in the previous month.
Similarly, the FBN Quest report attributes changes in output in July to the rainy season, which has both positive and negative.
“Not surprisingly, one respondent explains a rise in stocks as the consequence of naira appreciation and the lower cost of imported raw materials,” the FBN Quest report said.
Simon Travers, managing director of Josepdam Port Services (JPS) Nigeria Limited, whose terminal specialises in the handling of general, dry bulk and liquid bulk cargoes, confirmed a rise in import recently to BusinessDay.
“We had an about 23 percent drop in cargo throughput in 2016, but in the first half of 2017 we have actually exceeded the throughput figure for the comparable period of 2015 and 2016,” Travers said.