Naira depreciation spurs 32.6% rise in manufacturing investment as job creation drops 37.8%

The depreciation of the naira under President Bola Tinubu’s administration in 2023 has led to contrasting outcomes for Nigeria’s manufacturing sector, according to the Manufacturers Association of Nigeria (MAN).

While the sector saw a 32.6% rise in investment, employment generation suffered, falling by 37.8%. Capacity utilization also dipped slightly from 56.4% in 2022 to 55.1% in 2023.

Segun Ajayi-Kadir, Director General of MAN, presented these insights at the association’s 52nd Annual General Meeting, highlighting key findings from the 2023 Annual Report.

Ajayi-Kadir revealed that investment in the manufacturing sector for 2023 totaled N429.47 billion, a notable increase from the N323.98 billion recorded in 2022. This surge, he noted, was largely driven by the currency devaluation, with the second half of 2023 alone seeing a 22.6% investment increase over the first half.

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However, the sector faced challenges in employment, with job creation declining from 16,300 positions in 2022 to 10,133 in 2023. Ajayi-Kadir attributed this reduction to several factors, including the naira redesign policy and policy shifts by the new administration, such as fuel subsidy removal and exchange rate unification.

Job creation in the second half of 2023 alone fell by nearly 42%, reflecting pressures on firms, some of which were forced to shut down.

Ajayi-Kadir also reported a decline in capacity utilization, which dropped from 56.5% in the first half of 2023 to 53.6% in the second half, bringing the year’s average to 55.1%, a 1.3-point decrease from 2022. The MAN DG emphasized that while currency devaluation boosted sectoral investment, it presented significant operational and employment challenges, urging the government to consider balanced policies to support sustainable growth in the sector.