The Manufacturers Association of Nigeria (MAN) has reported a significant decline in sales within the manufacturing sector, particularly in cement and consumer goods, citing a 30 percent drop in cement sales and a 20 percent reduction in consumer goods sales during the peak of the naira scarcity earlier this year.
In a ‘Special Focus’ section of its Manufacturing CEOs Confidence Index, MAN has outlined the detrimental effects of the naira redesign policy on the manufacturing industry.
According to the report, the Central Bank of Nigeria should have exercised caution in transitioning the country towards a cashless economy, as rushing such a transition and aggressive policy implementation had a severe impact on various sectors.
The report highlights the crisis’s crippling effect on manufacturing companies, revealing a staggering 30 percent decrease in cement sales and a 20 percent decrease in consumer goods sales.
This scarcity of funds directly hampered manufacturers’ working capital, disrupting their daily business operations.
Also, the naira scarcity led to a reduction in consumer patronage of manufacturing firms, resulting in an increase in inventory levels, especially for retail goods.
The crisis also exposed the cash-dependent distributive trade sector to substantial risks, significantly impacting the manufacturing value chain and escalating logistics costs.
The report stated, “The substantial reduction in money velocity left opportunity for speculation and ignited the creation of a naira black market that compounded the woes of manufacturers already plagued by insufficient forex. The naira scarcity clearly wiped out numerous small and medium manufacturing businesses whose transactions were cash-based, especially those within the agro-allied industries who regularly deal with local farmers in remote towns where no formal banking is in sight. More unfortunately, the exorbitant POS charges on such cash constrained the operations of resilient manufacturing SMEs and worsened their cost of doing business.”
In related news, BUA has announced plans to lower cement prices, and a manufacturer assures that dust particles from their cement plant remain below regulatory limits.
However, an Ogun community has expressed concerns about air pollution by a cement firm in the region, highlighting the need for environmental considerations within the industry.
