The Manufacturers Association of Nigeria reported that at the height of the naira crisis earlier this year, cement sales decreased by 30%.
The association 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 policy on the manufacturing industry in a “Special Focus” of its Manufacturing CEOs Confidence Index.
According to the report, because of the significant 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 report claims that the protracted crisis nearly brought manufacturing companies to their knees by causing sales of consumer goods 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 also claimed that the economic crisis had negative effects on the logistics cost chain and the manufacturing value chain by placing the heavily cash-based distributive trade sector at great risk.
The report stated, in part, “The significant decline in money velocity created room for speculation and sparked the emergence of a naira black market, adding to the woes of manufacturers already struggling with a lack of foreign exchange.
“It is evident that many small and medium-sized manufacturing companies with cash-based transactions were destroyed by the naira shortage, particularly those in the agro-allied sectors that frequently do business with local farmers in outlying communities with no sign of formal banking. More regrettably, the outrageous POS fees on such cash restricted the operations of hardy manufacturing SMEs and increased their cost of doing business.
