Economic Strain: Over 700 Manufacturers Cease Operations in 2023, MAN Reports
The Nigerian manufacturing sector grapples with significant challenges as over 700 industries shuttered their operations in 2023, with an additional 335 becoming distressed, according to the Manufacturers Association of Nigeria (MAN). The dire situation arises amidst mounting economic pressures exacerbated by exchange rate volatility, rising inflation, and other economic adversities.
MAN voiced discontent over the imposition of the Expatriate Employment Levy (EEL) by the federal government, citing it as an additional burden on already beleaguered manufacturers. The association cautioned that such a levy could further escalate the cost of doing business in Nigeria, compounding the multifaceted challenges faced by the manufacturing sector.
The naira unification implemented by the Tinubu administration in June 2023 has further strained the manufacturing landscape. The sharp devaluation of the naira, with its value plummeting by 253.6% against the dollar, has intensified production costs and exacerbated the issue of unsold inventory.
With unsold finished products ballooning to ₦350 billion and real growth in the sector dwindling to a mere 2.4%, the manufacturing industry finds itself in a precarious position. MAN highlights the profound negative repercussions of the forex crises on the sector, emphasizing the urgent need for intervention to mitigate the economic downturn.
However, concerns persist regarding the potential adverse effects of the EEL policy on Foreign Direct Investments (FDI) in Nigeria. While the Organised Private Sector argues against its implementation, MAN advocates for a halt to the policy, citing its detrimental impact on the manufacturing landscape.
As the manufacturing sector grapples with these challenges, stakeholders underscore the critical importance of implementing measures to alleviate the economic strain and foster a conducive environment for industrial growth and sustainability.
