The Manufacturers Association of Nigeria (MAN) in a statement said 767 shut down in 2023, while 335 manufacturing firms became distressed as a result of the multidimensional challenges confronting the sector.
According to the Manufacturers Association of Nigeria (MAN), the halting of business operations by the affected companies comes against the backdrop of exchange rate volatility, rising inflation and other economic challenges that have worsened the investment climate.
MAN also expressed dissatisfaction over the Expatriate Employment Levy (EEL), a financial contribution imposed by the federal government on employers who hire foreign workers saying it would amount to a duplication and a burdensome addition.
The statement read in part, “The imposition of EEL poses a potential impact on the manufacturing sector and the economy at large.
“This will in turn mark an unwarranted and unprecedented addition to the cost of doing business in Nigeria, especially to manufacturers. The manufacturing sector is already beset with multidimensional challenges. In the year 2023, 335 manufacturing companies became distressed and 767 shut down.”
The Nigerian manufacturing sector has been faced with a lot of pressure following the naira unification by the Tinubu administration in June last year.
As at June 13, 2023, the naira traded for ₦471 per dollar in the official I&E market before the unification of the currency. The value of the Naira dropped by 253.6% as at February 23, 2024 as the currency exchanged for ₦1,665.50 to a dollar on the Nigerian Foreign Exchange Market (NAFEM).
With the rise in the exchange rate and the pressure on the country’s economy, manufacturers began facing difficulties like high cost of production, which eventually led to an escalating inventory of unsold goods.
MAN also revealed that inventory of unsold finished products has jumped to ₦350 billion while real growth in the sector has dropped to 2.4%. The body also noted that the unintended negative consequences of the forex crises on the manufacturing sector are “humongous and cannot be accommodated at this time of evident downturn in our economy.”