Despite Concerns Over Credit, Manufacturing Sector Records 6.93% Growth

The manufacturing sector of the economy recorded a growth of 6.93 per cent in the fourth quarter of last year amid lack of significant credit advance from the banking sector.

The growth was 2.13 per cent higher than the 4.80 per cent which was recorded in the third quarter of the year, according to the National Bureau of Statistics (NBS).

There has been increasing concern over the reluctance by commercial banks to advance significant credit to the real sector which is critical to resuscitating economic activities as oil revenues to government continue to decline due to the falling price of oil.

At the last monetary policy committee (MPC) meeting of January 2016, the CBN governor, Mr. Godwin Emefiele noted that though Net domestic credit (NDC) grew by 12.13 per cent, it remained below the provisional benchmark of 29.30 per cent for 2015 while growth in aggregate credit reflected mainly growth in credit to the Federal Government by 151.56 per cent in December 2015 compared with 145.74 per cent in the corresponding period of 2014.

Nevertheless, the apex bank had initiated a number of plans to increase lending to the real sector; hence, the recent growth in the manufacturing sector, which had hitherto being on a decline may be unconnected with recent interventions in the sector.
However, according to the fourth quarter GDP estimates released recently by the statistical agency, the sector contributed 9.09 per cent to Nominal GDP in Q4 2015 quarter, though lower than the 9.11 per cent recorded in the corresponding period of 2014, and 9.67 per cent in the third quarter of 2015.

It further noted that real GDP growth of the manufacturing sector slowed by 13.09 per cent to 0.38 per cent (year-on-year) from 13.47 per cent growth recorded in fourth Quarter of 2014.

Growth was however 2.13 per cent higher than rates recorded in Q3 2015 while on a quarter-on-quarter basis, the sector slowed on the margin by -0.03 per cent with oil refining and Motor vehicle and Assembly weighing on the sector manufacturing.

Notably, the manufacturing sector recorded a nominal year on year growth of 2.43 per cent in the period under review. This was 28.63 per cent lower than the 31.06 per cent growth rate recorded in the corresponding quarter of 2014, and 1.02 per cent lower than the growth rate of 3.46 per cent recorded in Q3.

Quarter–on-Quarter, the sector grew by 51.5 per cent. The contribution of electricity, gas, steam and air conditioning supply to Nominal GDP was 0.71 per cent in the Fourth Quarter of 2015 lower marginally when compared to the contribution made in the corresponding quarter of 2014 recorded at 0.74 per cent.

The NBS said:”In real terms, the sector grew by 1.20 per cent in the Fourth Quarter of 2015, 1.61 per cent points lower than the corresponding period in 2014, and lower than the Third Quarter 2015 growth rate, which stood at 2.14 per cent. Quarter-on-Quarter, the sector grew by 51.67 per cent.

“The contribution of Electricity, Gas, Steam and Air Conditioning Supply to real GDP was 0.51 per cent in the fourth quarter of 2015, roughly unchanged from the Fourth Quarter of 2014 , and slightly higher than the contribution of 0.34 per cent in the Third Quarter of 2015.”

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