Market News

• 16 manufacturing firms incur N792b losses

The Manufacturers Association of Nigeria (MAN) has raised alarm over the unprecedented crisis facing Nigeria’s manufacturing sector following the Federal Government’s decision to float the naira in 2023. Speaking at the 39th Annual General Meeting (AGM) of MAN, in Ogun State, Chairman of the Ogun State chapter of MAN, George Onafowokan,  aid the naira float policy has caused a severe forex scarcity, making it nearly impossible for manufacturers to access affordable dollars for essential imports.

Onafowokan, who is also the Managing Director of Coleman Wires and Cables Industries Limited, addressed the theme, “Dollar to Naira Cost, the Nigerian Manufacturers’ Daily Dilemma: Exploring Strategies for Business Sustainability.”

He highlighted the soaring exchange rate, which surged to N1, 900 to $1 by early 2024, as a key driver of the sector’s challenges.

Onafowokan stated that due to the limited availability of forex at official rates, many manufacturers have turned to the parallel market, where rates have skyrocketed to N900 to $1, causing a significant rise in production costs.

He said this increase has placed substantial financial strain on businesses that rely heavily on imported raw materials and machinery, even as the economic impact has been substantial.

According to him, capacity utilization also plummeted, with inventories of unsold goods now valued at over N350 billion.

Onafowokan also highlighted the added burdens of inadequate infrastructure and rising energy costs, noting that key roadways in Ogun State that are critical for transporting goods and materials remain in disrepair, causing frequent accidents and increasing logistics expenses.

In addition, recent electricity tariff hikes by the Nigerian Electricity Regulatory Commission (NERC) have further strained manufacturers’ operational budgets, squeezing already narrow profit margins.

Acknowledging the Ogun State Government’s efforts to improve infrastructure, Onafowokan urged the administration to expedite ongoing projects to relieve some of the pressure on manufacturers.

He also called for a more efficient tax system and proposed a “Buy Made-in-Nigeria” initiative to stimulate local demand and provide much-needed support for the struggling sector.

Onafowokan’s recommendations underscore the urgent need for policy measures to support the manufacturing industry, which he emphasized as vital for Nigeria’s economic resilience and growth.