Manufacturers face crisis as Naira float drives forex scarcity, costs surge

BY MOTOLANI OSENI

Manufacturing firms under the auspices of the Manufacturers Association of Nigeria (MAN) are groaning over the effect of Naira float on their respective businesses.

The chairman of the Ogun State Manufacturers Association of Nigeria (MAN), Mr. George Onafowokan frowned at the unprecedented crisis facing Nigeria’s manufacturing sector following the government’s decision to float the naira in 2023.

Onafowokan stated this at the 39th Annual General Meeting(AGM) of the association held yesterday in Ogun State, with the theme, ‘Dollar to Naira Cost, the Nigerian Manufacturers’ Daily Dilemma: Exploring Strategies for Business Sustainability’.

He highlighted the soaring exchange rate, which has surged to N1,900 to $1 by early 2024, as a key driver of the sector’s challenges, saying that this policy move has caused a severe forex scarcity, making it nearly impossible for manufacturers to access affordable dollars for essential imports.

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Onafowokan also highlighted the added burdens of inadequate infrastructure and rising energy costs, adding that recent electricity tariff hikes by the Nigerian Electricity Regulatory Commission have further strained manufacturers’ operational budgets, squeezing already narrow profit margins.

Acknowledging the Ogun State government’s efforts to improve infrastructure, Onafowokan urged the administration to expedite ongoing projects to relieve some of the pressure on manufacturers.

He also called for a more efficient tax system and proposed a ‘Buy Made-in-Nigeria’ initiative to stimulate local demand and provide much-needed support for the struggling sector.

Ogun State Governor, Mr. Dapo Abiodun had expressed the state government’s dedication to creating an enabling environment for manufacturers. Abiodun, who was represented by Commissioner for Industry, Trade, and Investment Mr. Adebola Sofola, assured the manufacturers of enabling environment for their businesses to thrive.

The governor acknowledged the challenges faced by manufacturers, reaffirming the state’s commitment to addressing infrastructure and power issues.

“We recognize the struggles manufacturers face. Our policies are designed to create an environment where businesses can thrive and attract foreign investors. We are committed to improving infrastructure and tackling power challenges, even though fiscal policy remains outside our control,” Abiodun said.

President of MAN, Otunba Francis Meshioye highlighted the significant challenges manufacturers face due to current monetary policy, exchange rate pressures, and the high costs of diesel and raw materials.

He urged the Ogun State government to domesticate the Presidential Executive Order 003, which mandates local patronage by government agencies, to boost demand for Nigerian-made goods.