Despite the myriad of binding constraints plaguing the manufacturing sector in Nigeria, it recorded a growth of 1.5 percent while the manufacturing output in Africa contracted -0.7 percent in the last quarter of 2023 (Q4’23).
This was revealed from data obtained from the UN Industrial Development Organization (UNIDO), reflecting the resilience of Nigerian manufacturers.
The UN agency stated that the manufacturing industry continued to face headwinds with global manufacturing recording year-on-year (YoY) growth of only 1.5 percent during the period. It singled out Nigeria (1.5 percent) and South Africa (1.7 percent) as the countries that recorded growth in the sector in Africa within the quarter.
According to UNIDO, “Limited data on Africa revealed another quarter of shrinking manufacturing output (-0.7 per cent) during Q4’23.
“The growth patterns of the different countries diverged to a significant degree – Nigeria (1.5 percent) and South Africa (1.7 percent), for example, remained in positive territory, while Senegal (-5.5 percent) and Tunisia (-0.6 percent) recorded output reductions.”
UNIDO further stated: “Manufacturing in Asia and Oceania recorded the highest YoY growth rate of 3.4 percent in Q4 2023.
In comparison, the manufacturing output in Africa and Northern America was negative during the last quarter of 2023, dropping by 0.7 percent and 0.5 percent YoY, respectively.
Among countries, China, India, and Indonesia reported annual manufacturing YoY growth beyond 4 percent in Q4 2023.
“Several challenges strongly influenced the manufacturing sector during 2023. These challenges included a high rate of global inflation that led to subdued demand, persistent supply chain disruptions and the ramifications of regional conflicts.
“Additionally, an insufficient supply of highly qualified workforce in certain industries and increasingly frequent natural disasters, whose effects are already affecting production today, will require a coordinated and sustainable response from global leaders.
“During Q4’23, the manufacturing sector in most regions continued to face production losses.
“The region of Asia and Oceania, which achieved the best regional performance with a manufacturing expansion of 3.4 percent, remained the only exception.
Meanwhile, the UN Trade and Development (UNCTAD) has adduced reasons for the increasing divestment of multinationals especially from developing economies.
In its latest report on ‘Global economic fracturing and shifting investment patterns’, UNCTAD stated: “Multinational enterprises are increasingly cautious about expanding their operations globally, especially in tangible assets.
“Accelerated automation, political shifts towards interventionism and protectionism, and the imperative of sustainability, on one hand, and heightened investors’ risk perception due to the pandemic and geopolitical tensions, on the other, are complicating the landscape of international investment.
“Another major shift is the rise of the services sector in attracting investment, taking over from manufacturing.
“The share of cross-border greenfield projects in the services sector rose from about 65 percent two decades ago to over 80 percent, and services-related investment within manufacturing industries nearly doubled to about 70 percent.
“Meanwhile, FDI in manufacturing has seen a significant downturn, with an average annual decline of over 10% in the three years following the outbreak of the pandemic.”