The Manufacturers Association of Nigeria (MAN) has reported that 16 major manufacturing firms in the country lost a staggering N792 billion between 2023 and 2024 due to the continued depreciation of the naira.
In an address delivered at the 39th Annual General Meeting of the Ogun State chapter of MAN, Chairman George Onafowokan raised the alarm about the severe impact of the naira’s decline on the manufacturing sector.
Onafowokan, who also serves as the Managing Director of Coleman Wires and Cables Industries Limited, warned that the crisis, triggered by the government’s decision to float the naira in 2023, was worsening the country’s economic challenges.
“The fall of the national currency has been a major contributor to the soaring inflation rates in Nigeria, which hit 28.92 percent by December 2023,” Onafowokan said, referencing data from the National Bureau of Statistics.
The decline in the naira’s value, a major policy of President Bola Tinubu-led government, has put immense pressure on manufacturers who rely on imported raw materials, exacerbating production costs and leading to job cuts in some sectors.
Onafowokan also pointed out the Federal Government’s response to the crisis through a $2.25 billion oil-for-cash loan facility from the African Export-Import Bank, aimed at boosting dollar liquidity in the economy.
However, the effectiveness of the intervention remains to be seen as manufacturers continue to struggle with the ripple effects of the currency devaluation.
Onafowokan explained that the manufacturing sector faced substantial foreign exchange losses in 2023, a trend that continued into 2024, forcing many companies to suspend or halt operations entirely.
According to him, “Approximately 16 major manufacturing firms lost a total of N792 billion due to the Naira’s depreciation, driven by monetary policy reforms. Small and medium-sized enterprises (SMEs) and smaller manufacturers have also been hit hard.”
He said the soaring exchange rate had been identified as a primary factor exacerbating the challenges.
“The policy changes have created a severe forex shortage, making it nearly impossible for manufacturers to access affordable dollars for vital imports.”
“With limited access to official forex rates, many manufacturers have been forced to turn to the parallel market, where exchange rates have surged, driving up production costs. This surge has placed enormous financial pressure on businesses that rely on imported raw materials and machinery.
“Additionally, the state’s deteriorating road infrastructure, essential for the transportation of goods and materials, continues to cause frequent accidents and inflate logistics costs,” he stated.
Onafowokan added that the recent hike in electricity tariffs by the Nigerian Electricity Regulatory Commission had further stretched manufacturers’ budgets, further narrowing their already slim profit margins.