The Manufacturers Association of Nigeria (MAN) has reported a significant decline in cement sales by 30% during the peak of naira scarcity earlier this year.
MAN noted a 20% decrease in the sales of consumer goods due to limited access to cash during this period.
MAN’s ‘Special Focus’ Manufacturing CEOs Confidence Index report highlighted the adverse effects of the naira redesign policy on the manufacturing sector.
The report argued that the Central Bank of Nigeria should not have rushed the country’s transition to a cashless economy or pursued aggressive policies since substantial progress had already been made in that direction.
The prolonged crisis had a crippling impact on manufacturing companies, resulting in a 20% decrease in sales of consumer goods and a 30% drop in cement sales.
Naira scarcity disrupts manufacturing operations
This scarcity of naira directly affected their working capital, disrupting daily business operations.
The naira scarcity led to reduced consumer patronage of manufacturing firms, causing an increase in inventory levels, especially for retail goods.
It also exposed the cash-dependent distributive trade sector to significant risks, negatively impacting the manufacturing value chain and increasing logistics costs.
The report emphasized that the economic crisis had severe consequences for small and medium manufacturing businesses, particularly those in the agro-allied industries that relied on cash transactions, as they often dealt with local farmers in remote areas without formal banking infrastructure.
High point-of-sale (POS) charges further constrained the operations of resilient manufacturing SMEs, exacerbating their cost of doing business.