With a combined manufacturing production value of N3.2 trillion in the second half of 2021, Lagos and Ogun industrial zones are responsible for 86 per cent of manufactured goods consumed in the country and exported.
According to the latest data released by the Manufacturers’ Association of Nigeria (MAN), of the N3.73 trillion worth of goods produced across 14 industrial zones nationwide, Lagos (Ikeja and Apapa) and Ogun zones accounted for the bulk of locally produced goods, while the remaining 12 zones recorded production value of N526 billion.
This further reinforces the claim that Lagos and Ogun remain the industrial hubs of the nation.
Specifically, in Lagos, the Ikeja zone recorded a production value of N1.81 trillion while the Apap zone’s value dropped to N526.9 billion. Ogun industrial zone produced goods worth N867.3 billion in the second half of the year.
Production value in the manufacturing sector totaled N7.03 trillion in 2021 as against N4.42 trillion recorded in 2020.
According to MAN, the increase in the manufacturing production value in the second half of 2021 was associated with the increase in cement production due to the new BUA cement factory in Sokoto; the African Glass new factory that produces glass products; and activities of the five newly established paper mills that recycle waste paper into carton.
Notwithstanding the improved performance of the manufacturing sector during the year, MAN, however noted that the performance is still far beyond its potential growth and contribution to national output due to almost innumerable challenges confronting the sector.
“Following direct feedback from manufacturers, we recommend first and foremost that the government should create plausible incentives for investment in the development of raw materials locally through the backward integration and resource-based industrialization initiatives.
“We recognise an urgent need for investment and production of Active Pharmaceutical Ingredients (API) in the country; this should be adequately incentivized to encourage significant private investments,” MAN added.
Although MAN claimed electricity supply from the national grid had marginally improved since 2019 as indicated by the average daily electricity supply and outage, the local producers stated that electricity supply from the grid had persistently been inadequate, compelling manufacturers to invest heavily in alternative energy sources to sustain uninterrupted production activity.
While some operators have invested in diesel generating plants, some others are utilizing gas plants.
They lamented that costs associated with these plants are further increased by expenditure on spare parts and other energy management apparatuses such as stabilizers, UPSs, and Inverters.
“Unfortunately, the cumulative expenditure on these alternative energy sources and the high tariff associated with supplies from the national grids majorly account for the high cost of production in the sector, with the share of energy standing at a colossal 40 percent”, it added.
Based on identified circumstances, MAN said expenditure on alternative energy sources in the manufacturing sector stood at N45.04 billion in the second half of 2021 as against N57.75 billion recorded in the corresponding half of 2020; thus, indicating N12.71 billion or 22 percent declined over the period.
However, the figure increased by N12.86 billion when compared with N32.18 billion recorded in the preceding half. Expenditure on alternative energy sources stood at N77.22 billion in 2021 as against 81.91 billion recorded in 2020. The decline in expenditure on alternative energy sources in 2021 was ascribed to the marginal improvement in the national electricity supply over the period.