767 Manufacturers Shut Down As Unsold Goods Stand At N350bn

With the multidimensional challenges affecting the manufacturing sector in Nigeria, the Manufacturers Association of Nigeria (MAN) has revealed that 767 manufacturing companies were shut down in 2023.

The Association said that 335 manufacturing companies also became distressed, while the capacity utilisation in the sector has declined to 56 per cent; interest rate is effectively above 30 per cent; inadequate foreign exchange to import raw materials and production machine, while inventory of unsold finished products has increased to N350billion and the real growth has dropped to 2.4 per cent.

The director-general of MAN, Segun Ajayi-Kadir, stated this in a statement expressing the concern of the Association over the Expatriate Employment Levy (EEL) recently unveiled by the Federal Government.

According to the National Bureau of Statistics (NBS), Nigerian nationals constitute only 59 per cent of total jobs in Nigeria, their wages account for less than 45 per cent of total wages, and the average basic salary of expatriates stands at more than 45 per cent above the basic salary.

Ajayi-Kadir said that the Association was struck with disbelief, seeing that the EEL runs contrary to the President’s Renewed Hope Agenda and the kernel of his Fiscal Policy and Tax Reform initiative.

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He added that the unintended negative consequences on the manufacturing sector were humongous and cannot be accommodated at this time of evident downturn in the nation’s economy.

“As the major investors and employers in Nigeria, manufacturers believe that, while the levy is ostensibly primed to promote local employment, improve forex and non-oil income earnings, the levy will regrettably deter foreign direct investments, disincentivize domestic investors who have partnership with foreign investors and undermine knowledge transfers that are critical for Nigeria’s economic growth,” Ajayi-Kadir emphasised.

He added that the policy will surely undermine the administration’s determination to position Nigeria as an attractive global investment destination.

“MAN posits that the rather punitive levy is already being perceived as a punishment imposed on investors for daring to invest in Nigeria and indigenous companies for employing needed foreign nationals. It will deter multinational companies from either investing in Nigeria or setting up regional headquarters in the country.

“Also, the levy will make Nigeria a more expensive location for global expertise that international companies require for their operations. Overall, we risk slowing down knowledge and skills transfer to Nigerians and undermining a key avenue for the country to move up the technology ladder,” he explained.

Also, the director-general of Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, said that “while we are fully in support of government policies that enhance the profile of the business environment, generate more revenue for the government, and create more opportunities for local employment, we are concerned about likely perception by foreign investors that the Nigerian government is not accommodative to foreign workers. This perception is harmful to our drive for Foreign Direct Investments (FDIs) inflows.”

She added that the Chamber acknowledged the government’s efforts to boost local employment and skills development through the EEL, saying “however, a careful balance must be struck so that this levy does not become an inhibition to attracting and retaining foreign investments crucial for economic growth.”