The Manufacturers Association of Nigeria (MAN) in its Executive Summary of Bi-Annual Economic Review released for the second half of 2022, revealing concerning trends in the manufacturing sector. The report highlights a significant increase in the inventory of unsold finished products, pointing to economic challenges affecting purchasing power and exacerbated by the Naira Redesign policy.
According to the report, the inventory of unsold finished products in the manufacturing sector surged to N282.56 billion in the second half of 2022, a substantial increase of N112.81 billion or 66 percent compared to the corresponding period in 2021. It also showed an N85.46 billion or 51 percent increase when compared to the first half of the year. The total inventory of unsold goods in the sector for 2022 reached N469.66 billion, surpassing the N384.58 billion recorded in 2021.
The high inventory levels can be attributed to the low purchasing power in the economy, primarily caused by the declining real income of households. The continuous increase in inflationary pressures in the country has eroded the buying capacity of consumers, leading to a decrease in demand for manufactured goods. This, in turn, resulted in a buildup of unsold inventory for manufacturers.
Additionally, the Naira Redesign policy implemented in the last quarter of 2022 further exacerbated the economic challenges. The policy involved the withdrawal of a significant amount of the “old Naira” without an adequate replacement with the “new notes.” As a result, the economy faced a cash crunch, severely limiting households’ ability to purchase items and contributing to the high inventory of unsold goods across the country.
The findings of the MAN report underscore the urgent need for measures to address the economic challenges faced by households and manufacturers. It calls for policies that can stabilize inflation, boost purchasing power, and restore consumer confidence. Additionally, the report emphasizes the importance of carefully implementing monetary policies to minimize disruptions and ensure a smooth transition during currency redesign initiatives.
The MAN report serves as a crucial resource for policymakers, economists, and industry stakeholders, providing a comprehensive understanding of the manufacturing sector’s performance in the second half of 2022. It highlights the impact of economic challenges on manufacturers and the need for proactive measures to address the issues at hand. By implementing strategic interventions and supportive policies, the government can help stimulate demand, reduce unsold inventory, and support the growth and sustainability of the manufacturing sector.
Moving forward, it is essential for stakeholders to work collaboratively to address the economic challenges faced by Nigeria. Through concerted efforts, including targeted policies, investment in key sectors, and effective management of currency redesign initiatives, the country can foster a conducive environment for economic growth and recovery.
MAN’s Executive Summary Bi-Annual Economic Review provides valuable insights into the state of the manufacturing sector, guiding decision-makers and stakeholders in formulating effective strategies. It is hoped that the findings of the report will contribute to informed policy discussions and actions aimed at revitalizing the Nigerian economy and ensuring a prosperous future for the manufacturing industry.