LCCI predicts short-term decline in manufacturing sector as consumer demand shrinks

By Onome Amuge.

Nigeria’s manufacturing sector is expected to remain weak in the short term due to squeezed consumer spending impacted by the rising inflationary pressure as companies and businesses across the country feel the bite of heightening operating costs and forex scarcity.

The Lagos Chamber of Commerce and Industry (LCCI) stated this in its mid-year economic review & outlook for 2023,presented recently in Lagos.

This is as the Manufacturers Association of Nigeria (MAN) lamented that the inflation hike has led to a rise in the cost of production, higher costs of raw materials, labour and other production inputs and reduced profit margin leaving manufacturers to pass on higher costs to consumers in the form of higher prices.

To this end the LCCI called on the government to roll out appropriate cushioning or palliative policies and measures to address the situation.

The chamber recommended more policy reforms to be embarked upon by the government to improve the business environment, boost investor confidence, stimulate economic growth, create more employment and alleviate poverty.

It also called on the President Bola Tinubu administration to continuously improve electricity supply and resolve all issues on disco profitability and reduce consumption costs to address the problem of poor generation which has been affecting productivity of manufacturers.

“To reduce the shocks from disruptions to supply chains for raw materials, manufacturers should be assisted with subsidised input and more allocation of forex for the importation of critical inputs,” it said.

The Chamber also suggested that while the Central Bank of Nigeria (CBN) embarks on monetary tightening to tame inflation, it should ensure that targeted concessionary credit to the private sector is sustained for small businesses.