Speaking at the 39th Annual General Meeting of MAN on Tuesday in Ogun State, Onafowokan, who also serves as the Managing Director of Coleman Wires and Cables Industries Limited, addressed the theme, “Dollar to Naira Cost, the Nigerian Manufacturers’ Daily Dilemma: Exploring Strategies for Business Sustainability.”

He highlighted the soaring exchange rate, which has surged to NGN1,900 to $1 by early 2024, as a key driver of the sector’s challenges.

“This policy move has caused a severe forex scarcity, making it nearly impossible for manufacturers to access affordable dollars for essential imports,” Onafowokan stated.

Due to the limited availability of forex at official rates, many manufacturers have turned to the parallel market, where rates have skyrocketed to NGN900 to $1, causing a significant rise in production costs. This increase has placed substantial financial strain on businesses that rely heavily on imported raw materials and machinery.

The economic impact has been substantial. Inflation has risen to 28.92 percent as of December 2023, and 16 major manufacturing firms are estimated to have incurred cumulative losses amounting to N792 billion.

Capacity utilization has plummeted, with inventories of unsold goods now valued at over N350 billion.

Onafowokan also highlighted the added burdens of inadequate infrastructure and rising energy costs.

He noted that key roadways in Ogun State, critical for transporting goods and materials, remain in disrepair, causing frequent accidents and increasing logistics expenses.

In addition, recent electricity tariff hikes by the Nigerian Electricity Regulatory Commission have further strained manufacturers’ operational budgets, squeezing already narrow profit margins.

He also called for a more efficient tax system and proposed a “Buy Made-in-Nigeria” initiative to stimulate local demand and provide much-needed support for the struggling sector.

Onafowokan’s recommendations underscore the urgent need for policy measures to support the manufacturing industry, which he emphasized as vital for Nigeria’s economic resilience and growth.

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