The National Bureau of Statistics (NBS) reported 88.16% increase in capital inflow into the manufacturing sector in the first half of 2023 at $861.16 million compared to $457.67 million in the first half of 2022.
The Lagos Chamber of Commerce and Industry (LCCI) notes that the capital imported into the manufacturing sector in the first half of the year is largely in form of loans and bonds, reflecting the challenges facing the manufacturing sector and the need to meet short-term obligations and slowing business activities. For example, Dangote Group and Tolaram raised N300 billion bonds, $38 million, respectively.
The significant increase reflects a low base of capital imported in the previous year and investors’ reaction to the two critical reforms, fuel subsidy removal and exchange rate harmonization, in the first month of the new administration.
The inflow in H1 2023 is expected to impact the manufacturing sector, particularly firms mitigating against current challenges, meeting short-term obligations, and falling consumer demand. Despite the harsh operating environment, the sector continues to demonstrate a degree of resilience and grew by 1.61% and 2.20% in Q1 and Q2 2023 respectively.
DR CHINYERE ALMONA, FCA
LAGOS CHAMBER OF COMMERCE & INDUSTRY
11 OCTOBER 2023