Nigerian manufacturers have stated that their inventory of unsold goods jumped to a record high with a value of N402.4 billion as consumer spending fell in a difficult business environment.
It’s a confirmation of “the reality that the disposable income of the consumers has been grossly eroded,” the president of the Manufacturers Association of Nigeria, Mansur Ahmed, told journalists in Lagos.
Ahmed said many manufacturing companies were having difficulties in getting foreign currencies to import raw materials and spares that weren’t available in Nigeria.
“Over 40% of dollar needs are unmet, constraining producers from operating at full capacity. Unreliable electricity supply is also forcing members to spend more than 38% of their production costs on alternative power, adding to their woes,” he said.
He said President Muhammadu Buhari’s government decision to shut the country’s borders, ostensibly to curb the flow of illegal goods, was stifling exports by members to the West African regional market.
“It is important that we open it immediately so that important Nigerian manufacturers who are trading in the West Africa region legitimately can resume. Otherwise some of them will lose their significant market.”
Blueprint reports that the manufacturing PMI in the month of July stood at 44.9 index points, indicating a contraction in the manufacturing.
12 sub-sectors shrank in the following order: printing & related support activities; primary metals; fabricated metal products; paper products; food, beverage & tobacco products; chemical & pharmaceutical products; furniture & related products; electrical equipment; plastics & rubber products; petroleum & coal products; textile, apparel, leather & footwear, and cement.
The latest PMI figures show that Nigeria’s manufacturing and the non-manufacturing sectors are yet to recover from the effects of Covid-19 lockdown, which caused disruption in all economic activities across the country.
Also, the continued contraction in the manufacturing sector implies that unemployment may rise further in the economy.
According to the Economic Sustainability plan recently released by the Nigerian government, unemployment may hit c.40 per cent by the end of 2020, a trend that may leave the Nigerian economy in a sustained deep recession.
