In the wake of escalating inflationary pressures and economic challenges, the manufacturing sector in Nigeria witnessed a substantial 45.4% year-on-year surge in unsold finished products during the first half of 2023 (H1’23). This surge, as reported by the Manufacturers Association of Nigeria (MAN), is attributed to a weakened purchasing power of consumers coupled with other economic factors.
The report read: “The inventory of unsold finished products in the manufacturing sector saw a significant increase to N271.96 billion during the first half of 2023, as compared to N187.08 billion recorded in the corresponding period of 2022. This indicates a substantial rise of N84.88 billion or 45.4 percent over this timeframe.
“This increase in inventory can be attributed to a weakened purchasing power of the consumers, brought about by diminishing real household income resulting from the ongoing escalation of inflationary pressures, compounded by the scarcity of naira in the first quarter of the year and the aftermath of the subsidy removal.”
Rising Unsold Inventory:
The inventory of unsold finished products in the manufacturing sector soared to N271.96 billion in H1’23, compared to N187.08 billion in H1’22. This represents a substantial increase of N84.88 billion, signifying a 45.4% rise. The report highlights that diminishing real household income, driven by persistent inflationary pressures, played a pivotal role in this inventory surge.
Job Losses Mount:
Amid the challenging economic environment, the manufacturing sector also suffered a significant loss of jobs. A total of 3,567 jobs were lost in H1’23, marking an increase from the 1,709 job losses in H1’22. This upward trend in job losses is a matter of concern for the industry.
Causes of Job Losses:
Segun Ajayi-Kadir, the Director General of MAN, attributes the surge in job losses to several factors. The unfriendly business environment hastily implemented policies, and the fallout of the naira redesign, which led to a scarcity of currency notes in the first quarter of the year, have all contributed to this concerning trend.
He said: “The decline in the number of jobs created in the sector during the period further highlighted the unfriendly business environment resulting from the hasty policies and residual effect of the currency redesign policy that led to naira crunch,” he added.
The manufacturing sector’s struggle with rising unsold inventory and job losses underscores the need for proactive measures to address inflationary pressures, create a more favorable business environment, and implement policies that promote stability and growth. As Nigeria navigates these economic challenges, stakeholders must collaborate to find sustainable solutions for the manufacturing industry’s resilience and recovery.