Nigeria’s Manufacturing Sector Sheds Over 3,500 Jobs in H1 2023, New Report Shows
In a worrying trend for Nigeria’s economy, the manufacturing sector has witnessed a significant loss of jobs in the first half of 2023.
According to the Manufacturers Association of Nigeria’s (MAN) ‘Half Yearly Review of the Economy’, the sector has shed 3,567 jobs during this period. This represents an increase of 1,855 job losses from the same period in 2022, and an increase of 805 job losses from the second half of the previous year.
Unfriendly Business Environment and Hasty Policies
The MAN attributes these job losses to an unfriendly business environment and hastily implemented policies, most notably, the redesign of the naira. This policy led to an acute scarcity of notes, significantly affecting the smooth operation of businesses. These conditions have further been exacerbated by the lingering effects of the Russian-Ukrainian war, which have heightened uncertainty in the global economic landscape.
The report also highlighted a decrease in capacity utilization and an increase in the cost of funds for manufacturers. Capacity utilization fell to 56.5% versus 57% during the same period in 2022. This decrease, coupled with the rising cost of funds, has placed an additional strain on manufacturers, potentially contributing to the decision to shed jobs.
Inventory of Unsold Finished Products
Adding to the woes of the manufacturing sector, the inventory of unsold finished products has seen a substantial increase. The inventory rose to N271.9bn during the first half of 2023, a stark increase from N187bn in the corresponding period of 2022. This rise can be attributed to reduced purchasing power of consumers, another consequence of inflationary pressures and the scarcity of the naira.
Effects of Subsidy Removal and Exchange Rate Unification Policy
The report also noted the adverse effects of the subsidy removal and exchange rate unification policy introduced towards the end of the first half of 2023. These measures have led to increased uncertainty, eroding investor confidence, and exacerbating inflationary pressure. This has, in turn, reduced consumers’ purchasing power, negatively impacting manufacturers.
The MAN has called for urgent measures to address these issues. The association has suggested that the government should prioritize providing a more conducive business environment, addressing the issues of forex shortage, and managing the effects of the naira redesign. The success of the manufacturing sector is crucial for economic growth, and its current struggles indicate a pressing need for effective solutions.
Future Predictions and Concerns
Going forward, the association projects further declines in employment conditions, predicting a drop to 47.8 points in the coming months. The report further warns that, if the current trends continue, the manufacturing sector risks becoming endangered. This would have severe repercussions for Nigeria’s economy at large, making it essential to address the issues facing the sector as promptly and effectively as possible.
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