Rising costs push manufacturing exports down 62% in 4yrs

The manufacturing sector in Nigeria has experienced a significant decline in its contribution to non-oil exports over the past four years, with a decrease of 62 percent according to recent reports. This decline can be attributed to several factors, including rising production costs, infrastructure challenges, and a weak domestic currency.

Nigeria's manufacturing sector has long been a key contributor to the country's economy, accounting for a significant portion of its gross domestic product (GDP) and employment opportunities. However, the sector has faced numerous challenges in recent years, leading to a decline in its competitiveness and export performance.

One of the major challenges facing manufacturers in Nigeria is the rising cost of production. According to data from the National Bureau of Statistics (NBS), the Producer Price Index (PPI), which measures the average change over time in the prices received by domestic producers for their output, increased by 17.38 percent year-on-year in January 2021. This trend has been on the rise for several years, putting pressure on manufacturers and making it increasingly difficult for them to remain competitive in both the domestic and international markets.

Another challenge is the infrastructure deficit, which continues to hinder the growth and competitiveness of the manufacturing sector. Poor power supply, inadequate road networks, and limited access to water and other essential utilities are some of the infrastructure challenges that manufacturers face on a daily basis, making it difficult for them to operate efficiently and effectively.

Furthermore, the weak domestic currency, the Naira, has also contributed to the decline in the manufacturing sector's contribution to non-oil exports. The Naira has depreciated significantly against major currencies such as the US Dollar and the Euro, making Nigerian exports more expensive for international buyers and reducing their competitiveness in the global market.

Despite these challenges, there are some positive signs for the manufacturing sector in Nigeria. The Nigerian Export Promotion Council (NEPC) reported that non-oil export earnings increased by 11.3 percent year-on-year in Q1 2021, driven by sectors such as agriculture, solid minerals, and solid minerals. The Nigerian government is also taking steps to address some of the challenges facing the sector, including efforts to improve infrastructure, reduce production costs, and promote export diversification.

In conclusion, the manufacturing sector's contribution to Nigeria's non-oil exports has declined significantly over the past four years, with a decrease of 62 percent. This decline can be attributed to rising production costs, infrastructure challenges, and a weak domestic currency, among other factors. However, there are also some positive signs for the sector, and the Nigerian government is taking steps to address some of the challenges and promote its growth and competitiveness.