- 16 Major Firms Lose N792 Billion Due to Forex Scarcity, Rising Costs
- Manufacturers Struggle as Dollar Exchange Hits NGN1,900
The Chairman of the Ogun State branch of the Manufacturers Association of Nigeria (MAN), George Onafowokan, has expressed deep concerns about the ongoing crisis in Nigeria’s manufacturing sector following the government’s decision to float the Naira in 2023.
He revealed that 16 major manufacturing companies have suffered cumulative losses of N792 billion due to the currency’s devaluation.
Speaking at the 39th Annual General Meeting of MAN, Ogun State chapter, with the theme “Dollar to Naira Cost, the Nigerian Manufacturers’ Daily Dilemma: Exploring Strategies for Business Sustainability,” Onafowokan underscored the severe impacts of the soaring exchange rate, which has reached NGN1,900 to $1 by early 2024.
“This policy shift has led to a crippling scarcity of foreign exchange, making it nearly impossible for manufacturers to obtain affordable dollars for necessary imports,” he explained.
With limited access to forex at official rates, many manufacturers are now forced to turn to the parallel market, where rates have skyrocketed to NGN900 to $1. This increase has drastically raised production costs, placing immense financial strain on businesses that rely on imported raw materials and machinery.
The naira’s depreciation has led to widespread losses in the manufacturing sector, continuing from 2023 into 2024. Onafowokan reported that some companies had to either temporarily suspend or fully halt operations.
“Sixteen major manufacturers collectively lost N792 billion due to these monetary reforms,” he noted, adding that small and medium-sized enterprises (SMEs) and smaller manufacturers have faced similarly severe setbacks.
Onafowokan also emphasized additional burdens faced by manufacturers, including poor infrastructure and escalating energy costs.
He pointed to the deteriorated state of major roads in Ogun State, which are essential for transporting goods, noting that road conditions lead to frequent accidents and higher logistics costs.
While he acknowledged the Ogun State government’s efforts to address these infrastructure challenges, Onafowokan urged faster completion of ongoing projects to ease the strain on the sector.
He also called for a streamlined tax system and proposed a “Buy Made-in-Nigeria” initiative to stimulate local demand, which he believes could provide essential support to Nigeria’s struggling manufacturing industry.
