Market News
Naira depreciation shot up manufacturing investment by 32.6% - VANGUARD
•As jobs created plunges by 37.8%
By Yinka Kolawole
The depreciation of the naira by the administration of President Bola Tinubu in 2023 has led to mixed fortunes in the performance of the manufacturing sector, with the sector recording a significant increase of 32.56 percent in investment in the year, while employment generation plunged by 37.83 percent and capacity utilisation inched down by 1.3 points to 55.1 percent from 56. 4 percent recorded in 2022.
Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, alluded to this in his presentation of the 2023 Annual Report at the 52nd Annual General Meeting of the association.
Ajayi-Kadir noted that accumulated investment in the sector in 2023 rose to N429.47 billion compared to N323.98 billion recorded in 2022, indicating an increase of 32.56 percent, adding that total jobs created in 2023 stood at 10,133, a 37.83 percent reduction compared to 16,300 jobs recorded in 2022.
He stated: “The manufacturing sector witnessed investment growth in naira terms during the second half of 2023, reaching N236.57 billion from N192.89 billion recorded in the first half of the year. This represents a significant rise of N43.68 billion or 22.65 percentage points when comparing the two periods.
“Furthermore, the sector’s accumulated investment for the entire year of 2023 rose to N429.47 billion, marking a 32.56 percentage point or N105.49 billion increase when compared to N323.98 billion recorded in 2022.
“This upward trend in investment (monetary terms) within the sector during the review period was driven by the devaluation of the naira.”
The MAN DG however noted the impact of the naira redesign policy in the first half of 2023 and consequences of the new administration’s policy mix, which included the removal of fuel subsidies and the unification of the exchange rate on the manufacturers.
“The manufacturing sector experienced a significant decline in employment generation in the second half of 2023. The number of jobs created fell from 6,412 in the first half to 3,721 in the second half revealing a 41.97 percent decrease over the period.
“Furthermore, the total jobs created for the entire year stood at 10,133, thus indicating 37.83 percent reduction compared to 16,300 jobs recorded in 2022.
“A considerable number of manufacturing firms ceased operations during this time, further exacerbating the pressure on employment rate.
“The capacity utilisation rate dropped from 56.5 percent in the first half of 2023 to 53.6 percent in the second half of the year, revealing a 2.9 percentage point reduction. Consequently, the average capacity utilisation for 2023 dropped to 55.1 percent from 56. 4 percent recorded in 2022 indicating 1.3 percentage point reduction over the period,” Ajayi-Kadir added
