A CRITICAL ANALYSIS OF THE IMPACT OF COVID-19 IN THE MANUFACTURING SECTOR: A CASE STUDY OF DANGOTE SUGAR REFINERY

CHAPTER ONE

INTRODUCTION

1.0 BACKGROUND OF THE STUDY

Manufacturing industry has traditionally played a key role in the economic growth of developing countries.Manufacturing Industry involves designing, processing, and preparation of products from commodities and raw materials. This includes automobile, chemical, food and beverage, machinery, electronic, and other industries. The manufacturing sector is a major part of the economy as it accounts for nearly 16% of the global GDP in 2018.

One of the hardest-hit segments from COVID-19 is the manufacturing sector. In the first three months after COVID-19 emerged Wuhan City, Hubei Province, China, a devastating number of new cases were reported across China and several countries around the world. It was finally declared as a global pandemic by the World Health Organization (WHO) on March 2020 (WHO 2020). Evidence indicates that COVID-19 transmitted through respiratory droplets via contact routes such as the mouth, nose, and conjunctiva or eyes (UNICEF 2020). prevalently the novel corona virus started in China which is home to the majority of the factories that supply raw materials to several manufacturing units across the world. Measures were taken to stop the spread of the virus hence the need for lockdown.

The lockdown that followed brought the manufacturing facilities to a standstill, derailing the entire global supply chain. To put things into perspective, more than 75 percent of businesses have “one or more direct or Tier 1 supplier,” from China, and 938 of the Fortune 1000 companies have Tier 2 suppliers there (Batch E.RP 2020). This triggered a chain of events, including a sharp decline in global Foreign Direct Investment(FD) inflows, and a downturn in economies world over. The United Nations Conference on Trade and Development (UNCTAD) estimated that the COVID-19 outbreak could cause global FDI to shrink by 5 to 15 percent, due to the downfall in the manufacturing sector coupled with factory shutdown. 

1.2 STATEMENT OF THE PROBLEM

The impact of COVID-19 on the global manufacturing industry can be classified into discrete manufacturing, (i.e. automobile, machinery, electrical and electronics, metal, aviation, etc.), and process manufacturing, i.e., food & beverage, chemicals, pharmaceutical and medical equipment, paint and coatings, and personal care & cosmetics, among others.

In the current scenario, food & beverage manufacturing companies are facing significantly reduced consumption by consumers as well as supply chain issues. The grocery shelves are witnessing increased scarcity, and the rampant stockpilers who have indulged in panic buying have contributed heavily to it, apart from, of course, the supply chain derailment.

The supply of raw materials and ingredients to the manufacturing sites has been badly affected, which has hampered production, forcing manufacturers to shun operations. Also, manpower availability in the time of social distancing has been another major headache. As a result, the food and beverage companies like Dangote Sugar have suffered a 22 percent loss in turnover globally, a study by French trade group ANIA suggests.While at-home consumption has shown a spike, the out-of-home consumption, which traditionally generates the higher-margin, has come to a standstill.Therefore against this backdrop that this research would study will examine the impact of covid-19 in the manufacturing sector.

1.3 OBJECTIVE OF THE STUDY

The study is aimed at critically examining the impact of covid-19 in the manufacturing sector. Specifically it is geared

1. To examine the economic relevance of manufacturing sector

2. To access the effect of covid-19 on food and beverage companies

3. To determine the extent at which covid-19 affected the manufacturing sector.

1.4 SIGNIFICANCE OF THE STUDY

This study will be significant to the entire knowledge body. It will enable business owners who are into manufacturing to re-strategise on ways of making their business thrive in the face of pandemic. It will heighten the awareness of government on the need to support manufacturing industries since they have an economic relevance to the elopement of the country. The study would also create opportunity for further research on the subject of discuss.

1.5 SCOPE OF THE STUDY

The study is aimed at critically examining the impact of covid-19 in the manufacturing sector.it will also examine the economic relevance of manufacturing sector.it will further access the effect of covid-19 on food and beverage companies. More so it will determine the rate at which covid-19 affected the manufacturing sector.However the study is delimited to Dangote Sugar Refinery, Lagos State Nigeria.

1.6 RESEARCH HYPOTHESIS

H0: The rate at which covid-19 affected manufacturing sector is low

H0: There is no significant effect of covid-19 on food and beverage manufacturing company.

1.7 LIMITATION OF THE STUDY

During the course of the study challenges encountered were exclusively but not delimited to the following numerous. These are

• Inadequate finance: the research was face with problem of inadequate fund which hinder the researcher from shuttering to Access Banks within Lagos more so in printing and collation of questionnaires

• Time constrain: time factor pose another constraint since having to cope in this research which went simultaneously within the time schedule of other academic work making it impossible to undertake this study in large more representative skill.

1.8 DEFINITION OF TERMS

COVID-19:Corona virus disease 2019 (COVID-19) is defined as illness caused by a novel corona virus called severe acute respiratory syndrome corona virus 2 (SARS-CoV-2.

Lockdown:A lockdown is a restriction policy for people or community to stay where they are, usually due to specific risks to themselves or to others if they can move and interact freely.

Manufacturing Sector: The manufacturing sector as defined by the U.S. government, comprises of establishments or companies that are engaged in the mechanical(including assembling of component parts), physical, or chemical transformation of raw materials, substances, or components into new products.

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