The Fast-Moving Consumer Goods (FMCG) segment accounts for half of the manufacturing sector’s $46 billion contribution to Nigeria’s Gross Domestic Product (GDP), the new GDP series released recently by the National Bureau of Statistics (NBS) shows.

The new series reveals an increase in the manufacturing sector’s GDP contribution to 9 percent, from 6.81 percent reported earlier in April. This implies that the manufacturing sector now contributes $45.9 billion (N7.67 trillion) to the country’s $510 billion economy.

The FMCG segment comprises mainly food, beverages and tobacco. The subsector grew to 12 percent in 2013, as against 7 percent recorded in 2012.

Another sector which made substantial contribution is the non-metallic sector, notably cement. The pharmaceutical and chemical products sub-sectors also had an immense contribution to the series.

The new series also reported the manufacturing sector’s exceptional average growth rate of 17.69 percent between 2010 and 2013. In 2013 alone, manufacturing recorded substantial growth of 22 percent, comparing positively with 14 percent reported in 2012.

“This was largely driven by a recent surge in oil refining (albeit off a very low base) and a sizeable pick-up in cement manufacturing,” said Razia Khan, head of African Research, Standard Chartered Bank.

“Growth in the chemical and pharmaceutical products subsector has remained robust,” Khan said.

Data from the Manufacturers Association of Nigeria (MAN) shows production output in the food, beverage and tobacco subsector rose to N83.72 billion in the second half of 2013 (H2 2013), from N64.4 billion reported in the first half of the year (H1 2013). Capacity utilisation in the sector appreciated to 61.5 percent in H2 2013, from 53.5 percent reported in H1 2013.

The sector also recorded an appreciable increase in local content, rising to 79.34 percent in H2 2013, from 68.99 percent reported in H1 2013.

In terms of unplanned inventory, the sector reduced to N389.5 million in H2 2013, from N1.02 billion in H1 2013. This was also followed by N49.95 billion investment in the sector in H2 2013, from N32.518 billion in the first half of the year.

Analysts say Nigeria’s 170 million population, fast-growing middle-class and large youth demography are responsible for the growth of this sector.

“We believe 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,” said Renaissance Capital (RenCap) in its recent report.

The growth in the cement subsector, analysts say, is owing to large-scale construction going on around the country. Apart from the reported housing shortage of 17 million units, which has led to a pronounced housing demand, cement is key to mass infrastructure construction going on in various parts of the country. MAN data shows that the sector, which is classified under non-metallic products, sources 91.48 percent raw materials locally and employed over one million people in 2013.

Investment in the sector in H1 2013 was N323.77 billion, a record unequalled by other sectors.
Capacity utilisation in the sector was 69.9 percent in H2 2013, from 53.8 in H1 2013. Similarly, output in H2 2013 was N215.79 billion, from N143.86 billion recorded in H1 2013.

Currently, Dangote Cement is widely used in mass construction, while Lafarge WAPCO’s products are also key in construction of bridges and other high-rise structures. The Third Mainland Bridge, Cocoa House, National Assembly Complex, among others, are some of structures built with local cement.

Currently, Nigeria is the largest manufacturer of cement in the sub-Saharan Africa region, having reached the 28 million metric tonne mark.

“The cement group, which has been leading the manufacturing sector, has contributed largely to the increases,” said MAN in its recent Economic Review.

Source: Businessday
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