767 Manufacturing Companies Shut Down Operations in Nigeria

...N350 billion goods unsold.
Manufacturers Association of Nigeria
Manufacturers Association of Nigeria Google photos

The Manufacturing Association of Nigeria (MAN) has highlighted a troubling trend in the industry, showing that around 767 manufacturing companies have shut down operations in 2023, while 335 are currently experiencing hard times.

This development has been attributed to a range of economic difficulties including exchange rate instability, increasing inflation, and a general deterioration in the investment climate.

Responding to the Federal Government's recent announcement of the Expatriate Employment Levy (EEL) which the association claims contradicts President Bola Tinubu's Renewed Hope Agenda and the core principles of his Fiscal Policy and Tax Reform initiative, the Director-General of MAN, Segun Ajayi-Kadir, stated that these challenges have taken a toll on the manufacturing industry, affecting its performance and sustainability.

Nigerian nationals only make up 59 percent of jobs in Nigeria, their wages make up less than 45 percent of total salary, and expatriate basic salaries are 45 to 50 percent higher than the basic salary, according to the National Bureau of Statistics (NBS).

The imposition of this levy is viewed as a counterproductive measure that would aggravate Nigeria's already difficult manufacturing circumstances.
The Expatriate Employment Levy has aroused widespread concern among business stakeholders.

According to MAN, the levy, which is $10,000 for staff and $15,000 for directors, is a significant increase over the previous $2,000 price for the Combined Expatriate Residence Permit and Alien Card.

This new charge has been questioned for potentially raising the cost of doing business in Nigeria, particularly for firms facing various hurdles.

According to MAN, the manufacturing sector's capacity utilization has fallen to 56%, worsened by rising interest rates and a lack of foreign exchange required to purchase essential raw materials and machinery.

The industry also confronts an inventory of unsold finished goods worth N350 billion, as well as a 2.4% decline in real growth.

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