The Manufacturers Association of Nigeria (MAN) has revealed that between 2023 and 2024, 16 major manufacturing firms incurred cumulative losses totaling N792 billion due to the challenges posed by the country’s economic conditions. The crisis, exacerbated by the government’s decision to float the Naira in 2023, has severely impacted the manufacturing sector. According to George Onafowokan, Chairman of Ogun State MAN, the depreciation of the Naira has been a key driver of the inflationary pressures that have worsened the sector’s financial strain. Inflation reached 28.92% by December 2023, further escalating the difficulties faced by manufacturers, especially in terms of accessing affordable foreign exchange for critical imports.
Onafowokan, also the Managing Director of Coleman Wires and Cables Industries Limited, explained that the currency depreciation has led to significant forex losses for manufacturers, forcing many to halt or suspend their operations. Smaller businesses, particularly SMEs, have also felt the brunt of the crisis, struggling to cope with the soaring exchange rate and a severe scarcity of foreign exchange. Due to the limited availability of forex at official rates, manufacturers have been forced to rely on the parallel market, where exchange rates are significantly higher, driving up production costs and putting immense financial pressure on businesses that depend on imported raw materials and machinery.
In addition to the forex challenges, Onafowokan highlighted the deteriorating state of key infrastructure, particularly road networks, which are essential for transporting goods and materials. Poor road conditions have led to frequent accidents and increased logistics expenses, compounding the sector’s difficulties. Furthermore, recent hikes in electricity tariffs have strained manufacturers’ budgets, squeezing profit margins even further. The combination of these factors has created an unprecedented crisis for the manufacturing sector, calling for urgent intervention from the government to stabilize the economy and ease the pressures on businesses.
