The Manufacturers Association of Nigeria (MAN) has reported that the sales of cement and consumer goods dropped significantly during the peak of the naira scarcity crisis earlier this year. According to MAN’s Manufacturing CEOs Confidence Index, sales of cement decreased by 30%, while sales of consumer goods dropped by 20% due to the lack of access to cash during this period.
The report highlighted the negative consequences of the naira redesign policy on the manufacturing industry. MAN stated that the Central Bank of Nigeria should not have rushed the country’s transition to a cashless economy or pursued aggressive policies, as significant progress had already been made in that direction.
The prolonged crisis severely affected manufacturing companies, leading to a decrease in sales and limiting their working capital, which in turn halted their daily operations. The scarcity of naira negatively impacted consumer patronage of manufacturing firms, resulting in increased inventories, particularly for retail goods.
The crisis also exposed the cash-based distributive trade sector to significant risks, affecting the manufacturing value chain and increasing logistics costs. Many small and medium manufacturing businesses, especially those in the agro-allied industries, were adversely affected, as their transactions were cash-based and they often dealt with local farmers in areas with limited access to formal banking services.
Additionally, high point-of-sale (POS) charges for cash transactions further constrained the operations of manufacturing SMEs and increased their cost of doing business. The report highlights the need for a more balanced approach to economic policies to support the manufacturing sector and ensure economic stability.