The Manufacturers Association of Nigeria MAN has stated that sales of cement dropped by 30 per cent at the peak of naira scarcity earlier this year.
The association also said that lack of access to cash during this period led to a 20 per cent drop in sales of consumer goods.
MAN stated that in a ‘Special Focus’ of its Manufacturing CEOs Confidence Index, it detailed the devastating consequences that the naira redesign policy had on the manufacturing industry.
The report said the Central Bank of Nigeria did not need to rush the country’s transition to a cashless economy or embark on policy aggressiveness, because significant progress has been made in that regard.
According to the report, the prolonged crisis almost crippled manufacturing companies with about 20 per cent and 30 per cent decrease in sales for consumer goods and cement, respectively.
The crisis, MAN said, impacted negatively on the manufacturers by directly limiting their working capital, thus halting their daily business operations.
It added that the naira scarcity crushed the consumer patronage of manufacturing firms and consequently escalated their volume of inventories, especially for retail goods.
It also stated that by exposing the highly cash-based distributive trade sector to great risk, the economic crisis had severe consequences on the manufacturing value chain and the cost of logistics.
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.”