The Manufacturers Association of Nigeria , MAN indicated that the level of unsold inventory goods is escalating which is affecting the existence of companies operating in the production sector of the economy and leads to attendant losing their jobs.
It was stated that this is caused as a result of pressure in the foreign exchange market and high cost of production.
The naira traded for N471 per dollar in the official I&E market on June 13, 2023 before the floatation of the currency, but exchanged for N1,665.50 to a dollar as at February 23, 2024 on the Nigerian Foreign Exchange Market (NAFEM), indicating a depreciation of more than 253.6 per cent over the eight-month period. The forex crisis is also stoking inflation, and coupled with high energy costs, purchasing power has continued plummet, stifling demand for goods.
Director General, MAN, Segun Ajayi-Kadir, said: “There are reports that across the board, many warehouses and plants of many manufacturing firms are stockpiled with unsold goods manufactured last year.
“The development is as a result of the devastating effects of the exchange rate crisis, inflation, fake and sub-standard goods, smuggling and other macro-economics challenges.
“These had put many manufacturers in a great dilemma in the current year as they are applying brakes on production by watching keenly events in the country to know if there would be improvement in sales in order to create space for fresh production for the year.” Ajayi-Kadir warned that manufacturers may be forced to halt making new products, leading to workforce down-sizing, since production lines are becoming inactive.
“The continued naira depreciation against the dollar, and the general forex volatility were forcing manufacturers to have a rethink. No genuine manufacturer could operate successfully and make profit under the current scenario, whereby the naira has been falling sharply more than expected in the country,” he stated.