40% of Nigeria's manufacturing firms to shut down over FX, new power tariff

The Manufacturers Association of Nigeria, (MAN) has decried the persistent forex crisis and recent tariff increment in the power sector warning that indigenous manufacturing firms may shut down operations soon.

According to the former chairman of MAN, Frank Onyebu, in a chat with The Sun, over 40% of Nigeria’s manufacturing firms are currently on the verge of collapse.

“For manufacturers using local inputs, the suppliers who raised their prices at the height of naira depreciation have refused or are unable to drop their prices. In the same vein, the manufacturers who imported their inputs at higher prices are unable to lower them until after the sale of those products manufactured with higher input cost.

I am afraid that if something concrete is not done within the shortest possible time, over 40% of manufacturing plants in Nigeria will eventually shut down.” Onyebu said.

The performance of multinational corporations for the financial year ended December 2023 showed the firms recorded a combined forex losses of ₦792 billion due to naira depreciation.

The recent power tariff increment has added to manufacturers' woes as most firms have had to battle with frequent production cuts, retrenchment of staff and difficulties with the payment of the increased bills.

In a recent statement, the National Union of Electricity Employees (NUEE) have said that the recent hike in the electricity tariff will lead to more closure of businesses and manufacturing sectors in the country.

Speaking further, the Acting General Secretary of the union, Dominic Igwebike, noted that consumers will be bearing the brunt of the recent electricity tariff hike which jumped from ₦68 /kwh to ₦225 /kwh as manufacturers will hike the cost of goods by about 300%.

Local manufacturers in Nigeria have called on the government to initiate strategic interventions and commence swift policy changes to address the troubling effects of the recent electricity tariff hike and persistent foreign exchange scarcity.