Nigeria's PMI recovers ground in March

The latest report from FBN Quest's Manufacturing Purchasing Managers' Index (PMI) for Nigeria has revealed a significant recovery, with the index increasing to 54.5 in March from 50 in February. The positive trend was observed across all company sizes, indicating a promising outlook for the country's business landscape. Chinwe Egwim, a Macroeconomic and Fixed Income Research Analyst at FBN Capital, provided valuable insights into the factors driving this improvement during a recent interview with CNBC Africa from Lagos. Egwim attributed the uptick in the PMI number to the Central Bank of Nigeria's (CBN) recent interventions, which have played a crucial role in enhancing business confidence within the sector. One of the key impacts of the increased supply of dollars is the improvement in the availability of raw materials, a critical factor for manufacturing activities. The CBN's interventions, particularly in the form of inject 1.8 billion through forex transactions, have also led to an increase in access to foreign exchange for visible transactions, thereby easing pressure on the parallel market. The appreciation of the Naira by approximately 35% on the parallel market post-CBN's interventions has further highlighted the positive effects of these measures. Notably, the PMI's significant surge from 50 to 54.5 in March reflects the improved output across medium-sized and small companies, with a notable increase in the number of respondents reporting higher output levels. While discussing the impact of the forex shortage on different company sizes, Egwim highlighted that medium-sized and small companies have been the most positively affected. Looking ahead, the focus shifts to sustaining this positive momentum over the next few months. Egwim noted the recent circular released by the CBN, emphasizing that banks have ample stock of forex to meet customer demand, which bodes well for the value of the Naira. The CBN's commitment to selling at least $80 million to banks for customer transactions further reinforces the efforts to stabilize the forex market. In conclusion, Egwim expressed optimism that maintaining the current interventions and support from the CBN could help sustain the positive trend in the PMI, fostering a conducive environment for business growth and enhancing overall economic stability in Nigeria. With the PMI on an upward trajectory and a favorable outlook for continued improvement, stakeholders in Nigeria's manufacturing sector can look forward to increased confidence and stability in the months ahead.