The Manufacturing Association of Nigeria (MAN) has released a concerning report indicating challenges within the manufacturing sector.
According to MAN, in 2023, approximately 767 manufacturing companies closed operations, and 335 faced distress, leading to an inventory of unsold goods valued at about N350 billion.
The report attributes the difficulties to various economic factors, including exchange rate volatility, rising inflation, and a deteriorating investment climate.
Major players in the manufacturing industry, such as Nigerian Breweries, Nestle Nigeria, Dangote Sugar, and Cadbury Nigeria, recorded significant losses in the 2023 financial year.
MAN points to adverse conditions, including a decline in capacity utilization to 56%, rising interest rates, and a scarcity of foreign exchange for importing essential raw materials and machinery.
The association also criticized the Federal Government’s introduction of the Expatriate Employment Levy (EEL), which has since been suspended.
MAN implied that the levies ran counter to President Bola Tinubu’s goals for his initiative on fiscal policy and tax reform as well as his Renewed Hope Agenda.
The EEL, charging $10,000 for staff and $15,000 for directors, raised concerns about increasing the cost of doing business in Nigeria, particularly for manufacturers facing numerous challenges.
MAN highlighted the potential impact of the EEL on international trade agreements, such as the African Continental Free Trade Area, expressing fears of negative consequences on Nigeria’s image, hindrance to regional integration efforts, and potential retaliatory measures against Nigerians working abroad.
The group urged President Tinubu to reevaluate the Expatriate Employment Levy’s implementation, pointing out that it would have detrimental effects on the manufacturing industry and the overall economy.
MAN urged discontinuing the levy to alleviate distress within the sector and align with Nigeria’s economic growth and development goals.
”The closure of numerous manufacturing businesses and the challenges faced by major companies could lead to a substantial drop in tax revenue for the government, impacting shareholders’ expectations and dividends.
”The industry faces significant headwinds, and strategic measures are required to revive and sustain manufacturing activities in Nigeria,”’ the association noted.
