The chairman of the Ogun State Manufacturers Association of Nigeria (MAN), George Onafowokan, has sounded an alarm over the deepening crisis in Nigeria’s manufacturing sector, linking massive financial losses to the government’s 2023 decision to float the naira.
Onafowokan disclosed that 16 major manufacturing companies have suffered a combined loss of ₦792 billion due to the steep depreciation of the naira.
He revealed this at the 39th Annual General Meeting of MAN’s Ogun State branch, held on Tuesday. The theme of the event was “Dollar to Naira Cost, the Nigerian Manufacturers’ Daily Dilemma: Exploring Strategies for Business Sustainability.”
Onafowokan identified the surging exchange rate, which has reached an astonishing NGN1,900 to $1 by early 2024, as a primary challenge for the manufacturing sector.
“This policy move has caused a severe forex scarcity, making it nearly impossible for manufacturers to access affordable dollars for essential imports,” he lamented.
He explained that manufacturers, facing difficulties in securing foreign exchange at official rates, have been forced to turn to the parallel market, where rates have skyrocketed to NGN900 to $1.
According to him, this alternative is driving up production costs and putting a heavy financial burden on companies reliant on imported raw materials and machinery.
“The manufacturing sector incurred significant forex losses in 2023, which extended into 2024, forcing many manufacturers to either temporarily suspend or completely halt their operations,” he said.
Onafowokan further shared that smaller manufacturers and SMEs have been equally affected, struggling to keep their operations afloat as the naira’s depreciation eats into their revenues.
“In fact, approximately 16 major manufacturing companies lost a combined total of ₦792 billion due to the depreciation of the naira resulting from monetary policy reforms,” he added.
He highlighted that the challenges are not only financial but also structural, with manufacturers facing infrastructure and energy hurdles.
One of the major challenges, he said, is inadequate infrastructure, particularly poorly maintained roadways essential for transporting goods and materials in Ogun State.
He noted that the state’s deteriorating roads cause frequent accidents, delays, and increased logistics costs, putting additional strain on businesses that are already financially stretched.
Onafowokan acknowledged efforts by the Ogun State government to improve infrastructure, yet he urged the administration to expedite these projects to ease the burdens on manufacturers.
“Manufacturers in Ogun State are relying on the government’s promise to improve infrastructure,” he stated. “We need accelerated efforts to relieve some of the pressures that are making production more challenging and costly.”
In addition to infrastructure concerns, Onafowokan pointed to rising energy costs, which he said are further eroding manufacturers’ profits and limiting their ability to compete.
The chairman proposed several strategies to help Nigeria’s manufacturing sector regain stability and reduce its dependency on imported goods.
Among his recommendations was a call for the government to introduce a more efficient tax system that would alleviate the financial load on manufacturers.
Onafowokan also suggested the launch of a “Buy Made-in-Nigeria” initiative to encourage local demand, support manufacturers, and foster a sense of pride in Nigerian-made products.
“This initiative could stimulate demand and provide crucial support for the struggling sector,” he suggested, calling on consumers and businesses alike to prioritize locally produced goods.
As the challenges mount, the manufacturing sector finds itself at a crossroads, with companies and policymakers seeking solutions to sustain businesses through an era of economic instability.
The ₦792 billion loss reported by Onafowokan is a stark indicator of the pressures facing manufacturers in Nigeria, where the economy is tightly intertwined with global currency dynamics and local policy shifts.
