Nigerian manufacturers reduced their investments in the economy by 61% between 2018 and 2021. This from economic reviews of the Manufacturers Association of Nigeria, MAN. The investment made by manufacturers fell from N552 billion in 2018 to N217.22 billion in 2021.
However, this signifies a 60.7% decline over the period. While investments made by members of MAN was N552 billion in 2018, they declined to N496.11 billion in 2019. During the COVID-19 crisis in 2020, investments crashed to N118.52 billion, rising slightly to N217.22 billion in 2021.
Professor of International Economics at Covenant University, Jonathan Aremu, says, “This reflects the issues facing the manufacturers in Nigeria, there is a multiplicity of taxes. One agency demands one form of tax and another demand another form of it. Access to finance is a big issue. The interest rate is too high and even if it is low, where will the money come from?”. He urged local manufacturers to improve the quality of their products in order to compete favorably in the global market.
Nigerian manufacturers are facing several issues that worsen their cost of production. The energy cost is enormous due to low energy supply to industrial zones by electricity distribution companies. Many manufacturers have abandoned DisCos and are using 100% of gas to power their factories.
Director of Research and Strategy, Chapel Hill Denham, Mr Tajudeen Ibrahim, says we attribute the decline in investments to foreign exchange scarcity.“The first factor that could have caused this is the scarcity of foreign exchange to import materials needed in terms of equipment and inputs.”
According to MAN, the cost of funds for members who borrowed from deposit money banks rose from 20.75% in 2020 to 21.5% in 2021. At the third Monetary Policy Committee, MPC, meeting of 2022 in May, the Central Bank of Nigeria raised the monetary policy rate. Which is the benchmark interest rate, from 11.5% to 13%