Onome Amuge
The Manufacturers Association of Nigeria (MAN) recently disclosed that 16 major manufacturing firms suffered losses amounting to N792 billion between 2023 and 2024.
MAN indicated that the unprecedented crisis in the manufacturing sector was largely attributable to the government’s decision to float the naira in 2023, which had a crippling effect on the sector’s financial health.
George Onafowokan, the chairman of the Ogun State chapter of the Manufacturers Association of Nigeria , laid bare the worrisome reality of the manufacturing sector in Nigeria during his address titled “Dollar to Naira Cost, the Nigerian Manufacturers’ Daily Dilemma: Exploring Strategies for Business Sustainability” at the 39th Annual General Meeting of the association’s Ogun State chapter.
In his address, Onafowokan raised concerns over the detrimental impact of the declining value of the national currency on the country’s inflation rates.
Citing recent data from the National Bureau of Statistics, Onafowokan observed that inflation had skyrocketed to 28.92 percent by December 2023, while the federal government was scrambling to secure a $2.25 billion oil-for-cash loan facility from the African Export-Import Bank to shore up dollar liquidity in the economy.
He stated, “The manufacturing sector incurred significant forex losses in 2023, which extended into 2024, forcing many manufacturers to either temporarily suspend or completely halt their operations.
“In fact, approximately 16 major manufacturing companies lost a combined total of N792 billion due to the depreciation of the Naira resulting from monetary policy reforms. The impact on SMEs and smaller manufacturers has been equally devastating.”
Onafowokan, who doubles as the managing director of Coleman Wires and Cables Industries Limited,
pointed out that the increasing exchange rate was a major factor compounding the difficulties faced by the manufacturing sector.
According to Onafowokan, the naira’s devaluation has not only led to a severe scarcity of foreign exchange but has also pushed up the cost of crucial imports, making them less affordable for manufacturers.
“Due to the limited availability of forex at official rates, many manufacturers have turned to the parallel market, where rates have skyrocketed, causing a significant rise in production costs. This increase has placed substantial financial strain on businesses that rely heavily on imported raw materials and machinery,” he added.
The MAN chairman, Ogun State chapter, also bemoaned the deplorable state of critical road networks within the state, which not only lead to frequent accidents, but also increase logistics costs for manufacturers.
He noted further that to compound these challenges, the Nigerian Electricity Regulatory Commission’s recent increases in electricity tariffs have further strained the operational budgets of manufacturers in the state, pushing already thin profit margins to the brink.
