- During the peak of naira scarcity, cement sales dropped by 30%, while consumer goods sales experienced a 20% decline
- The Manufacturers Association of Nigeria (MAN) states that the naira redesign policy had devastating consequences on the manufacturing industry
According to the Manufacturers Association of Nigeria, during the peak of naira scarcity earlier this year, cement sales dropped by 30%.
According to the association, the lack of access to cash during this time period resulted in a 20% drop in consumer goods sales.
MAN stated in a ‘Special Focus’ of its Manufacturing CEOs Confidence Index that the naira redesign policy had devastating consequences for the manufacturing industry.
According to the report, the Central Bank of Nigeria does not need to rush the country’s transition to a cashless economy or engage in policy aggressiveness because significant progress has already been made.
According to the report, the prolonged crisis nearly crippled manufacturing companies, with sales of consumer goods and cement falling by 20% and 30%, respectively.
According to MAN, the crisis had a negative impact on manufacturers by directly limiting their working capital, effectively halting their daily business operations.
It went on to say that the naira’s scarcity hurt manufacturing firms’ consumer patronage and, as a result, increased their inventory volume, particularly for retail goods.
It also stated that the economic crisis had severe consequences on the manufacturing value chain and logistics costs by exposing the highly cash-based distributive trade sector to great risk.
The report read in part;
The substantial reduction in money velocity left opportunity for speculation and ignited the creation of a naira black market that compounded the woes of manufacturers already plagued by insufficient forex.
The naira scarcity clearly wiped out numerous small and medium manufacturing businesses whose transactions were cash-based, especially those within the agro-allied industries who regularly deal with local farmers in remote towns where no formal banking is in sight. More unfortunately, the exorbitant POS charges on such cash constrained the operations of resilient manufacturing SMEs and worsened their cost of doing business.