Manufacturers face N350 billion stockpile amid forex, infrastructure challenges

At the 39th Annual General Meeting of the Manufacturers Association of Nigeria (MAN) Ogun State Chapter, manufacturers voiced concerns over the sector’s stagnation, with unsold finished goods piling up to N350 billion due to rising costs, forex scarcity, and decaying infrastructure.

Chairman George Onafowokan highlighted the “existential threat” of forex challenges, noting the naira’s steep 70% devaluation since it was floated in 2023, which has driven manufacturers to rely on costly black-market forex options.

“Since the forex reforms, the sector has suffered significant losses, with 16 major manufacturers losing N792 billion to currency depreciation,” Onafowokan stated, adding that capacity utilization has plummeted to 2.4% as high production costs and limited access to foreign exchange drive firms to downsize or halt operations.

Ogun’s poor road conditions exacerbate the crisis. “Transportation costs have surged as many haulage companies refuse services due to dilapidated roads,” he noted, urging faster repairs beyond ongoing projects like the Atan-Igbesa-Agbara road.

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Energy costs are also a heavy burden, with manufacturers spending up to 40% of production costs on power due to unreliable electricity and soaring diesel prices.

Guest speaker and Skystone Finance Managing Director, Ola Olabinjo, addressed forex volatility, advocating for a “predictable, stable exchange rate.” Olabinjo called for alternative financing and leaner inventory cycles, advising companies to explore Nigeria’s debt capital markets as an alternative to costly bank loans. “Manufacturers need just enough margin to sustain production, not extraordinary profits,” he said, calling on the government to ease tax demands on manufacturers already stretched thin.

Ogun State Commissioner for Industry, Trade, and Investment, Adeola Sofela, reassured manufacturers of government support, noting efforts to improve critical infrastructure and harmonize taxes. “Our goal is to maintain Ogun’s status as Nigeria’s industrial capital,” Sofela affirmed, pledging a business climate focused on supporting industrial growth amid challenging economic conditions.