In a stark reflection of the economic challenges facing Nigeria, the chairman of the Manufacturers Association of Nigeria (MAN), Ogun State chapter, George Onafowokan has said that 16 prominent manufacturing firms have suffered cumulative losses of N792bn due to naira depreciation.
This significant loss, Onafowokan stated, stems largely from the federal government’s decision to float the naira in 2023.
Speaking at the 39th Annual General Meeting of MAN’s Ogun State branch, held with the theme “Dollar to Naira Cost, the Nigerian Manufacturers’ Daily Dilemma: Exploring Strategies for Business Sustainability,” Onafowokan underscored the severe impact of the soaring exchange rate, which reached NGN1,800 to $1 in early 2024.
“The naira float policy has created a severe forex shortage, making it nearly impossible for manufacturers to access affordable dollars for essential imports,” Onafowokan said.
He explained that limited forex availability at official rates has forced many manufacturers to turn to the parallel market, where rates have surged from N1,700 to $1. This shift has caused a significant escalation in production costs, burdening companies that rely on imported raw materials and machinery.
“The financial toll on the manufacturing sector has been profound.
“Losses from forex-related challenges in 2023 spilt into 2024, leading many manufacturers to suspend or even cease operations altogether.
“Sixteen major companies alone have lost a staggering N792bn, while small and medium enterprises (SMEs) face equally devastating repercussions.”
Onafowokan also addressed the infrastructure and energy constraints compounding the sector’s challenges.
He highlighted that critical roadways in Ogun State, essential for the movement of goods and materials, remain in poor condition, leading to frequent accidents and higher logistics costs.
While acknowledging the Ogun State government’s efforts to improve infrastructure, Onafowokan called for expedited progress on ongoing projects to ease the strain on manufacturers.
Additionally, he called for a streamlined tax system and promoted a “Buy Made-in-Nigeria” initiative to encourage local demand and bolster the struggling sector.
With the manufacturing sector facing unprecedented pressures, Onafowokan’s remarks highlight the urgent need for economic policies that address forex shortages, infrastructure limitations, and rising operational costs, which continue to hamper growth and threaten the sustainability of Nigeria’s manufacturing industry.