Nigerian Manufacturing Sector Struggles as Hundreds of Companies Shut Down
The Manufacturing Association of Nigeria (MAN) has raised alarm over the troubling state of the manufacturing sector, revealing that 767 manufacturing companies shut down operations and 335 experienced distress in 2023. This downturn is attributed to various economic challenges, including exchange rate volatility, rising inflation, and a deteriorating investment climate.
MAN’s concerns were highlighted alongside its criticism of the Federal Government’s introduction of the Expatriate Employment Levy (EEL), which the association argues contradicts the objectives of President Bola Tinubu’s Renewed Hope Agenda and his Fiscal Policy and Tax Reform initiative. The imposition of this levy is seen as potentially exacerbating the already challenging conditions for manufacturers in Nigeria.
The Expatriate Employment Levy has sparked considerable concern among industry stakeholders, with MAN criticising the drastic increase in fees for expatriate staff and directors. The new levy, which charges $10,000 for staff and $15,000 for directors, represents a significant hike from the previous $2,000 fee for the Combined Expatriate Residence Permit and Alien Card.
MAN’s statement highlighted a decline in capacity utilisation to 56% in the manufacturing sector, compounded by rising interest rates and a scarcity of foreign exchange for importing essential raw materials and machinery. The sector also faces an inventory of unsold finished products valued at N350 billion, alongside a real growth drop to 2.4%.
The association has expressed concerns that the EEL could conflict with Nigeria’s international trade agreements, such as the African Continental Free Trade Area agreement, potentially hindering regional integration efforts and damaging Nigeria’s global image. MAN has called on President Tinubu to reconsider the implementation of the levy, warning of its negative impact on the manufacturing sector and the broader economy.
Nairametrics
