A Glimpse At MAN’s MCCI 

 The Index (MCCI) is a barometer used to aggregate the views of CEOs of manufacturing companies on changes in the economy. 

SIAKA MOMOH 

The Manufacturers CEO Confidence Index (MCCI) is an index constructed by the Manufacturers Association of Nigeria (MAN) to measure changes in quarterly pulse of manufacturing activities in relation to movement in the macroeconomy and government policies. 

The Index is therefore a barometer used to aggregate the views of CEOs of manufacturing companies on changes in the economy. The standard diffusion factors considered in the MCCI processes include the Current Business Condition, Business Condition for the Next Three Months, Current Employment Condition (Rate of Employment), Employment Condition for the Next Three Months and Production Level for the Next Three Months. 

The index also measures changes in key macroeconomic indicators including sector specific factors that represent Government activities and policy measures in the economy. Consequently, the effects of movements in Foreign Exchange, Lending Rate, Credit to the manufacturing sector and Capital Expenditure of the Government were also measured. In addition, it gauges the outcome of changes in business operating environment factors, which include Over-regulation, Multiple taxes/levies, Access to seaports, Local raw-material sourcing, Government’s patronage of Nigerian manufactured goods and Inventory of unsold manufactured products. 

A breakdown of the diffusion indices reveals that in the fourth quarter of 2024, current business condition (48.3), current employment condition (47.9) and current production level (47.5) recorded improvement due to the moderate increase in consumer demand, especially during the festive period. 

However, the three current indices stood below the 50-point threshold as a result of the prevailing hostile macroeconomic environment. Manufacturing operations were directly stalled by the lingering effects of the high cost of raw materials, energy and logistics as the existence of high exchange rate, interest rate and inflation rate remain unfavourable to the overall business environment. 

In contrast, all the three projections for the first quarter of 2025 recorded declines but remain above the 50-point threshold.The projected business condition in Q1 2025 slid from 56 points to 53.2 points. The projected employment condition also dropped from 53.8 points to 53 points while the expected production level declined from 54.3 to 54 points. This indicates that despite a predicted slowdown in business activity for the first month of 2025, operators remain moderately optimistic by the expectations of a more stable exchange rate, halt in interest rate hikes, minimal decline in energy prices and the enactment of favourable Tax Reform Bills by Q1 2025. 

Despite the prevailing macroeconomic and operational challenges embattling manufacturing companies in Nigeria, the CEOs remain resilient as revealed by the tepid rise of 0.5 point in the MCCI from 50.2 points in Q3 2024 to 50.7 points in Q4 2024. The moderate improvement in the Aggregate MCCI is the first since Q1 2024. 

The breakdown of the diffusion indices revealed that all current indices recorded improvement due to seasonal demand and relative stability in the exchange rate during the period. However, they remained below the 50-point benchmark. The report also confirmed a downward review of manufacturers’ expectation for the first quarter of 2025 due to the prolonged harsh macroeconomic environment and the predicted slowdown of business activity in the first month of 2025. Nevertheless, the projected indices remained above the 50-point threshold due to the expectations of a more stable exchange rate, halt in interest rate hikes, minimal decline in energy prices and the enactment of favourable Tax Reform Bills by Q1 2025. 

The sectoral breakdown of the report revealed that the confidence indices of 3 Sectoral Groups contracted while 7 Sectoral Groups witnessed improvement in confidence levels. However, 2 of the 7 Sectoral Groups dipped below the 50-point threshold. The zonal breakdown also showed that 5 Industrial Zones recorded confidence indices below 50 points while 9 performed above the threshold. However, 4 of the 9 Industrial Zones recorded contracted indices. 

MAN’s Recommendations 

Government can restore macroeconomic stability, achieve robust economic growth, enhance the business environment and improve the well-being of all citizens by actively implementing the following recommendations: