At the heart of the Nigerian economy, the manufacturing sector is currently facing significant challenges that threaten the existence of many businesses. Former President of MAN, Frank Onyebu, has stated that over 40% of the country’s manufacturing plants are at risk of closure.
The situation is dire, with manufacturers using local inputs stuck in a deadlock. Suppliers who maintained high prices during the naira depreciation are reluctant to adjust them. On the other hand, those who imported raw materials at inflated prices cannot reduce their production costs until goods made with these heightened input costs are sold.
Adding to the dilemma, large multinational companies have suffered combined foreign exchange losses of N792 billion due to the national currency’s depreciation. The recent hike in electricity tariffs has compounded the issues faced by manufacturers, leading to frequent production interruptions, widespread layoffs, and difficulties in meeting escalating bills.
The National Union of Electricity Employees (NUEE) has warned that the recent surge in electricity tariffs could force more businesses and manufacturing sectors to close down in Nigeria. Consumers are expected to bear the brunt of this increase, as manufacturers may need to raise the prices of their products by nearly 300% to offset the rising energy costs.
To avert the looming crisis and ensure a sustainable future for this crucial sector of Nigeria’s economy, immediate concrete measures are essential. Authorities should consider implementing policies to support manufacturers, providing tax incentives, and offering stimulus packages to bolster domestic production and safeguard jobs. Timely action is imperative to prevent the catastrophe predicted by Frank Onyebu and secure the manufacturing industry’s viability in Nigeria.
For further reading on this concerning issue, you can visit the following external link: More insights on the challenges faced by Nigeria’s manufacturing sector.