Africa

Troubling figures in the Nigerian manufacturing sector suggest an economic crises

According to a recent report by the National Bureau of Statistics (NBS), Nigeria’s manufacturing industry took a big hit, with profit margins falling 36% between 2021 and 2022.

In this study, the N2.87 trillion for Q2 2022 was compared to the N4.51 trillion for Q2 2021.

The export of manufactured goods likewise had a significant decline over the studied period, with its figures falling from N211.67 billion in 2021 to N119.53 billion in 2022. a decrease of 43.5 percent over a year.

These concerning numbers are the result of a number of things, including increased corporate operating expenses and insecurity. As the profit-to-cost ratio continues to grow, people in this sector find it harder to balance their books.

As a result of increasing their investments in production at decreasing profit margins, firms’ net profits keep declining. Additionally problematic is the cost of operating, which is similarly affected by inflation.

One of the main drivers of this drop is insecurity. The Manufacturers Association of Nigeria (MAN) stated in a Punch article that its members have to resort to using survival tactics in order to increase production.

Following an exclusive interview with Olusola Obadimu, Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, the same report also stated that the present slowdown that manufacturers are suffering was anticipated. He said that farmers’ lack of security has had a significant impact on their productivity and, consequently, the number of items produced.

The revenue anticipated from both agricultural products intended for export and raw materials intended for manufacturing is impacted by a decline in farming operations.

A similar problem was recently described in the Nigerian oil market report. This analysis revealed depressing returns in Nigeria’s most lucrative sector.

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