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.
Government’s Concrete Road Plan Threatens Cement Prices, Warns Nigerian Cement Producers
The Cement Producers Association of Nigeria has issued a stern warning that the Federal Government’s ambitious plan to introduce concrete roads could lead to a significant hike in cement prices, potentially reaching an alarming N9,000 per bag, up from the current N5,000.
The association is urging the government to tackle the persistent issue of cement price fluctuations and ensure Nigerians do not have to pay more than N5,600 per bag.
In a joint statement released by the National Chairman, Prince David Iweta, and National Secretary, Chief Reagan Ufomba, the association commended the Works Minister’s advocacy for cement-made roads but cautioned against potential consequences if the supply-side challenges are not addressed comprehensively.
The cement producers proposed a solution, emphasizing the need for road designs that facilitate the concurrent use of cement technology and asphalt pavement. They argue that such designs would allow contractors ample time for investment in necessary equipment and retooling, ensuring a smoother transition.
According to the statement, “Our findings across the country indicate that cement prices can surge to as high as N6,000 per bag during the rainy season. With the Minister of Works’ endorsement of cement technology and the President’s housing directives, we predict prices could exceed N9,000 per bag in the dry season if proactive measures are not taken.”
The association also urged the government to expedite the backward integration policy initiated during the late Yar’adua administration, which had started to positively impact cement availability and affordability.
They emphasized the necessity of breaking monopolies and favoritism in the sector, urging the government to expand participation with companies demonstrating verifiable local investment.
They further called for harmonization between fiscal and monetary policies, intervention in the foreign exchange market, restructuring of manufacturers’ bad loans, and a review of palliative measures to revive manufacturing concerns and reduce dependence on elusive foreign direct investment.
The Cement Producers Association of Nigeria’s statement underscores the urgency of addressing these issues to ensure the stability of the cement industry and maintain affordable prices for Nigerians, especially amid ambitious infrastructure projects.
Conoil Plc Declares N1.73 Billion Dividend
Conoil Plc announced its intention to pay N1.73 billion in divided to its shareholders for the 2022 financial year. This translates to N2.50 per share.
The major oil marketer revealed these impressive figures after its 53rd Annual General Meeting, held in Uyo, Akwa Ibom State.
Despite the challenging economic landscape in Nigeria, Conoil demonstrated remarkable growth with its Profit Before Tax surging by an astounding 60.1 percent to N6.13 billion in 2022, up from N3.83 billion in the preceding year.
This performance also translated to a 60 percent increase in Profit After Tax, soaring from N3.08 billion to N4.96 billion.
Conoil Plc’s gross earnings rose by 5.1 percent to N145.8 billion in the 2022 financial year, compared to N138.2 billion in 2021.
Shareholders unanimously approved the proposed dividend payout, reflecting their confidence in the company’s ability to navigate a challenging business environment.
Dr. Mike Adenuga, the Chairman of Conoil Plc, expressed the company’s commitment to creating value for shareholders and ensuring a growing share price.
He emphasized their consistent ability to improve operational margins and expand across all locations, focusing on delivering exceptional service to customers.
Looking ahead, Adenuga acknowledged potential challenges in the ever-changing geopolitical and socio-economic landscape but assured shareholders that Conoil would remain focused on strategies that yield dividends.
He highlighted the government’s reform initiatives, including the elimination of petrol subsidies and foreign exchange market reforms, as opportunities for growth.
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