Infrastructure deficiency restricts manufacturing to 55% capacity utilisation — MAN
The Manufacturers Association of Nigeria (MAN) has lamented that the dearth of basic infrastructure has constrained the Nigerian manufacturing sector to barely struggle to achieve 55% capacity utilisation over the years, far below the 70% threshold for optimal utilization.
The Director General, MAN, Mr. Segun Ajayi-Kadir, who disclosed this, also noted that the capacity utilisation of the nation’s manufacturing sector lags behind that of China and South Africa at 76% and 78% respectively.
His words: “Currently, the Nigerian manufacturing sector is barely struggling to achieve 55% capacity utilisation, whereas China and South Africa impressively stand at 76% and 78% respectively.
“The infrastructure deficiency constrains mass production and capacity utilisation, limits market access and hinders price competitiveness which often results in low patronage and reduced manufacturing export earnings.
“The expectation going forward is that the government should sustain the improved level of infrastructure development and be strategic in choosing projects to ensure that they are cited along the economic hubs within the country and those connecting neighbouring countries.
“A major performance indicator of the manufacturing sector is the capacity utilisation which reflects the ability of manufacturing companies to sustain production and cope with a rise in production or meet up with rising demand without increasing cost.
“Though currently barely struggling to achieve the target 70% threshold for optimal capacity utilisation, with adequate support, the manufacturing sector can be restored to its glorious moments in the eighties when it recorded over 70 percent capacity utilisation.
“The dearth of basic infrastructure impedes manufacturing in many ways. Clearly, the inadequacy of infrastructure frustrates and makes manufacturing unnecessarily uncompetitive when compared with what obtains in other countries with better infrastructures provided by the government.
“Sadly, it is the manufacturing sector that is largely bearing the brunt of the deficient state of our infrastructure.
“Utilities like power, rail, waterways and roads are essential when talking about manufacturing, because they facilitate seamless access to the market at affordable cost.
“When a nation lacks infrastructure, individuals and firms have to create infrastructure just like most manufacturers in Nigeria currently do; it increases the cost of production and makes essential goods out of the reach of many.”