Manufacturers Face Mounting Challenges As Naira Float Deepens Forex Crisis

The chairman of the Ogun State Manufacturers Association of Nigeria (MAN), George Onafowokan, has lamented 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 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.

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, Dapo Abiodun expressed the state government’s dedication to creating an enabling environment for manufacturers.

Abiodun, who was represented by commissioner for Industry, Trade, and Investment Adebola Sofola, assured the manufacturers of an 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 recognise 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.

Meshioye also called for enhanced infrastructure, especially the rehabilitation of federal roads within Ogun State, to support efficient movement of goods.

Additionally, he underscored the importance of developing the Ota, Agbara, and OPIC industrial estates and encouraged leveraging the amended Electricity Act to provide affordable and reliable power supply to the industrial zones.

He also called for tax harmonisation and levies to ease the financial burden on businesses, emphasising a collaborative approach to overcoming challenges and fostering economic growth.