The manufacturing sector PMI declined from 58.3 points to 51.1 points between February and March 20201. The slowdown was triggered by reduced growth in 7 subsectors including electrical equipment, chemical and pharmaceutical products, primary metals and non-metallic mineral products. Similarly, the non-manufacturing PMI index declined to 49.2 percent, falling below the 50 percent threshold for the first time in over 2 years1. The overall contraction is due to the depression in global economic activity which has led to a reduction in new orders, inventory and consequently employment levels across the manufacturing and non-manufacturing sectors. In the coming months, the reduced activity across both sectors is expected to continue as a result of the decline in global demand for exports and the reduction in local consumption. In the meantime, some manufacturers can switch to producing essential commodities that are required to tackle the pandemic. In addition, the cash transfers by the government should be distributed to manufacturing and non-manufacturing workers that would be laid off or furloughed as a result of the pandemic.
April 20, 2020
Nigeria Economic Update (Issue 13)
A recent report by the National Bureau of Statistics (NBS) indicates that Internally Generated Revenue (IGR) at the subnational level decreased slightly between 2014 and 2015. Specifically, the report shows that on the average, the IGR of all 36 states declined by 3.6 per cent from N707.9 billion in 2014 to N683.6 billion in 20157. A further disaggregation reveals that while IGR in 11 states improved in 2015 compared to 2014, IGR in 24 states were below their 2014 levels. As expected, Lagos state generated the most IGR during the period. Given that domestic resource mobilization is the most viable alternative to complement the shortfalls (driven by lower oil prices) in budgetary allocations to states from the federal government, state governments need to do more to improve the effectiveness and efficiency of revenue collection.
Recent data on Nigerias labour market points to a rise in the rate of unemployment and underemployment in 2015Q4. Specifically, compared to 2015Q3, the rate of unemployment and underemployment rose to 10.4 per cent and 18.7 per cent from 9.9 percent and 17.4 percent respectively. These statistics however masks the true situation of the youth employment in Nigeria. Disaggregated data by age category shows that unemployment and underemployment within the youth age category (15-24) was remarkably higher than the national average, at 19 and 34.5 per cent respectively.
The external reserves decreased week-on-week marginally by 0.2 percent from June 9, 2017 to June 16, 2017. The reserve declined from $30.27 billion to $30.21 billion. Given that crude oil revenue constitutes the most part of the reserve, the decline may be reflective of the week-on-week drop in global crude oil price (Crude oil price fell by approximately 2 percent to $47.377 per barrel as at June 16 2017). The ongoing forex intervention by the monetary authority also poses a challenge to foreign reserve conservation. Given the unimpressive performance of global oil prices in recent time, there is need to explore other areas with great potentials to generate foreign exchange earnings. Diversification of forex earnings remains the key to insulating foreign reserve against fluctuations in global commodity prices. The country can tap into solid minerals sector as alternative source of foreign exchange. Huge investment together with investor-friendly policies in solid minerals would make the sector attractive to investors.