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Manufacturers sack 3,567 workers, unsold goods hit ₦‎272billion – MAN

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No fewer than 3,567 jobs were lost in the manufacturing sector in the first half of 2023 according to figures obtained by The PUNCH from the Manufacturers Association of Nigeria.

MAN disclosed this in its half yearly review of the economy, which was released on Tuesday.

According to the report, employment generation in the manufacturing sector declined to 6,428 in the first half of 2023.

This was 32.8 per cent reduction in employment generation capacity when compared with 9,559 jobs generated in the first half of 2022.

The report read partly, “In the same vein, a total of 3,567 jobs were lost in the first half of 2023, indicating 1,855 more jobs lost when compared with the 1,709 jobs lost in the corresponding half of 2022, and 850 more jobs lost when compared with 2708 jobs lost in the last half of 2022.”

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MAN said the decline in the number of jobs created in the sector during the period further highlighted the unfriendly business environment, resulting from the hasty policies and residual effect of the currency redesign policy that led to the naira crunch.

The report also stated that the inventory of unsold finished products in the manufacturing sector increased to N271.9bn during the first half of 2023, compared to N187bn in the corresponding period of 2022.

This indicated a substantial rise of N84.88bn or 45.4 per cent over the timeframe. It also showed N11.64bn or 4.1 per cent decline when compared with the inventory value of N283.6bn recorded in the second half of 2022.

“This increase in inventory can be attributed to a weakened purchasing power of the consumers, brought about by diminishing real household income resulting from the ongoing escalation of inflationary pressures, compounded by the scarcity of naira in the first quarter of the year and the aftermath of the subsidy removal,” the report said.

It noted that subsidy removal and exchange rate unification policy towards the end of the first half left the economy on the brink of uncertainty, caused a ripple effect that further eroded investors’ confidence.

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MAN stated that, “As a result, businesses and foreign investors are increasingly wary of committing capital, thereby hindering economic growth and prospects for recovery.

“The combined effect of these is the resultant higher inflationary pressure, which fuels the cost of production, reducing consumers’ purchasing power and having a greater impact on the manufacturers.”

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Hong Kong court grants Chinese real estate giant reorganisation postponement

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Hong Kong’s Supreme Court has once again granted the highly indebted Chinese real estate giant Evergrande a postponement for its reorganisation plan.

Judge Linda Chan surprisingly postponed the decision until Jan. 29, the South China Morning Post reported on Monday.

The property developer, which has liabilities estimated at more than 300 billion dollars, is threatened with liquidation.

However, creditors from abroad had taken the company to court because of its missing several payments.

Chan had already said at the previous hearing that this would be the last postponement and that she would very likely agree to liquidation if China Evergrande did not find a plan for restructuring with its creditors.

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According to reports, however, the lawyers of the Hong Kong-listed group had now held out the prospect of being able to reach an agreement with the lenders in the coming weeks.

In the case of liquidation, an insolvency administrator would monetise the company and pay out the creditors.

Meanwhile, some experts were of the opinion that liquidation would return less money to creditors than a reorganisation, China Evergrande argued the same in court, according to reports.

The group had been trying to submit a restructuring plan since 2022, without success. Its founder and once China’s richest man, Hui Ka Yan, is being investigated by the Chinese authorities.

Like many other property groups, the company had been in a serious crisis for some time because it is earning significantly less on the slumping property market.

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The company is finding it more difficult to obtain state support and is no longer able to service its loans.

“The Evergrande case also shows that the era of large private property developers in China is coming to an end,’’ says Max Zenglein from the Merics China Institute in Berlin.

If Chan decides to wind up China Evergrande, this could also have an impact on other companies.

“One challenge for the government will be to prevent domino effects in the economy caused by major bankruptcies,’’ says Zenglein.

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German vice chancellor cancels COP28 visit due to budget crisis

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German Vice Chancellor Robert Habeck on Monday cancelled a trip to the UN Climate Change Conference in Dubai due to the budget crisis at home.

The move follows a landmark court decision earlier this month that blew a huge hole in the government’s spending plans.

Habeck’s presence in Berlin is necessary in order to make further progress in the talks on the 2024 budget, a spokeswoman for the Economy Ministry announced.

The cancellation was done in consultation with and at the request of Chancellor Olaf Scholz, she added.

Habeck, who is also economy and climate minister, was due to participate in the COP28 climate conference in Dubai on Tuesday.

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A recent decision by Germany’s Constitutional Court struck down plans to reallocate 60 billion Euros (65 billion dollars) borrowed during the Coronavirus pandemic for climate projects instead.

The fallout from the decision, which almost certainly impacts other special funds as well, has created a major budget crisis for Scholz’s three-party coalition government.

Negotiations on the budget is currently taking place primarily in a three-way round with Scholz, Habeck and Finance Minister Christian Lindner.

The coalition must reach an agreement within the next few days if it wants to adopt the budget for 2024 before the end of the year.

A political agreement in principle must be reached by the Cabinet meeting on Wednesday so that there is still enough time for the parliamentary process.

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Habeck, had earlier told Germany’s ARD television station on Sunday evening that he sees progress in the negotiations.

“I am very optimistic that we are well on the way to reaching an agreement,’’ he said.

When asked if this meant that he wasn’t sure that the coalition would reach an agreement, Habeck said: “I can’t speak for everyone. But I repeat that I believe we are making good progress.’’

“It is a process that is arduous, one can see that, but it is making progress,’’ Habeck added.

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