The Manufacturers Association of Nigeria reported that at the height of the currency crisis earlier this year, cement sales decreased by 30%.
According to The Punch, the group also claimed that a 20% decrease in consumer goods sales occurred during this time due to a lack of access to cash.
MAN claimed that it described the disastrous effects of the naira redesign strategy on the manufacturing business in a “Special Focus” of its Manufacturing CEOs Confidence Index.
According to the research, due to the tremendous advancements made in this area, the Central Bank of Nigeria does not need to aggressively pursue policy changes or hasten the country’s transition to a cashless economy.
The research claimed that the protracted crisis nearly brought manufacturing enterprises to their knees by causing sales of consumer products and cement to decline by 20% and 30%, respectively.
According to MAN, the crisis had a detrimental effect on the manufacturers by directly reducing their working capital and putting a stop to their regular business operations.
The lack of naira also hurt manufacturing companies’ ability to attract customers, which led to an increase in their stock levels, particularly for retail goods.
It further claimed that the economic crisis had negative effects on the logistics cost chain and the industrial value chain by placing the mostly cash-based distributive commerce sector in tremendous danger.
The report stated, in part, that “The significant decline in money velocity provided room for speculation and sparked the development of a naira black market that compounded the woes of manufacturers already plagued by insufficient forex.
“It is evident that many small and medium-sized industrial companies with cash-based operations were destroyed by the naira shortage, particularly those in the agro-allied sectors that frequently do business with local farmers in outlying communities with little sign of formal banking. More regrettably, the outrageous POS fees on such cash restricted the activities of hardy manufacturing SMEs and increased their cost of doing business.”
