The manufacturing sector is now the major driver of economic growth in Nigeria, the latest economic report by Renaissance Capital, has revealed.
According to the report, with Nigeria’s rebased Gross Domestic Product, the manufacturing sector is currently growing faster than the telecommunications, oil and gas and agricultural sectors.
The report, titled, “Nigeria’s GDP: Bigger but slower – Manufacturing is the engine of growth,” was released on Monday. The report further strengthens recent figures by the Manufacturing Association of Nigeria, which showed that there was an increase in maufacturing capacity utilisation from 46.3 per cent recorded in the first half of 2013 to 52.7 per cent in the 2nd half of 2013.
Specifically, the Rencap report stated that the manufacturing sector recorded 22 per cent growth in 2013, as against the 14 per cent it recorded in 2012, noting that the growth was largely driven by the textile, cement and food sub-sectors, among others.
The growth recorded by the manufacturing sector within the period under review, it said, accounted for one third of the total growth in the economy.
The report said, “Manufacturing is growing strongly, despite power deficit. The manufacturing sector is a much bigger, faster-growing sector under the new series (nine per cent of GDP as against the four per cent previously). In 2013, it recorded substantial growth of 22 per cent (as against 14 per cent in 2012), comprising one-third of total growth. Food, beverage and tobacco producers account for half of the manufacturing sector. The sub-sector’s growth accelerated to 12 per cent in 2013, against 7 per cent in 2012.
“An analysis of the growth drivers shows that telecoms is a maturing and slower-growing sector. The growth sectors are manufacturing (particularly food, cement and textile producers) and real estate.” The report further revealed that the cement sub-sector, which accounts for about one per cent of the country’s GDP, recorded phenomenal growth in 2013, as it posted a 39 per cent growth as against the 14 per cent recorded in 2012.
It stated, “Several of the smaller manufacturing sub-sectors are growing even faster than food producers. Cement, which only comprises one per cent of GDP, grew by a sizeable 39 per cent in 2013, up from a strong 14 per cent in 2012.
“Nigeria’s large population of upwardly mobile consumers, particularly in the south-west, coupled with investments in power, implies the strong growth of manufacturers, including food producers and breweries, is sustainable.”
Conversely, the report revealed that in 2013, the oil and gas sector experienced a decline in growth as the sector contracted by 13 per cent, while trade and real estate sectors overtook agricultural and financial services to emerge as the top three growth drivers of the Nigerian economy.
“The trade and real estate sectors trumped agriculture and financial services in 2013, to become among the top three growth drivers, together with manufacturing. The decline in agriculture’s growth contribution in 2013 was partly due to the 3Q12 floods. The upside is a smaller agriculture sector (23 per cent, as against 36 per cent) that reduces the economy’s exposure to it,” the Rencap report said.
According to analysts, the level of capacity utilisation in the manufacturing sector is an index of the health of the sector. When it is low, it indicates poor growth and vice-versa. The Rencap report therefore reflects the improving health of the Nigerian manufacturing sector just as the rising capacity utilisation has shown. Manufacturers in Nigeria had attributed the remarkable increase recorded in capacity utilisation within the last year to favourable government policies, especially with respect to industry, trade and investment.
The Minister of Industry, Trade and Investment, reacting on the new research findings, said the analyses, done by the reputed Renaissance Capital, corroborated the fact that the manufacturing sector was being transformed under the Transformation Agenda of President Goodluck Jonathan.
“It is a good thing that the manufacturing sector is breathing well under this administration. Figures are there as proof. All we need do now is further improve the situation through consistency in policy as we continue to work hard towards continuously improving Nigeria’s non-oil revenue,” Aganga noted.
