Unsold inventory hits N402bn
•Seek immediate re-opening of borders
Manufacturing companies Ounder the aegis of Manufacturers Association of Nigeria (MAN) expended 38 percent of their production cost on energy in 2019, while inventory of unsold manufactured goods stood at an all time high of N402.42 billion, about 7.2 percent rise compared to N375.42 billion in 2018.
Disclosing this at the 48th annual general meeting (AGM) of the association held in Lagos yesterday, President, MAN, Engr. Mansur Ahmed, stated: “The manufacturing sector performance that was expected to be strong having recorded an impressive performance in the 4th quarter of 2019 on account of border closure suffered a huge setback. In the same vein, inflationary pressure remains a source of concern as COVID-19 disrupted the demand and supply side of the global economy.
“The manufacturing sector spent over N67.38 billion on self-generated electricity with energy cost accounting for over 38% of production cost in 2019; and genuine exporters are still being owed huge sums of money as a backlog of unpaid outstanding from the Export Expansion Grant scheme.
“Inventory of unsold finished manufactured products has risen to an all-time high of about N402.4 billion confirming the reality that the disposable income of the consumers has been grossly eroded.”
On the way out for manufacturers, the MAN President called on the government to: “Reduce the financial pressure on companies occasioned by COVID-19 by compensating manufacturing concerns that are forced to shut down with 60 percent of employees’ salaries for at least three months to prevent layingoffs of employees and massive unemployment.
“Support manufacturing concerns with existing loan facilities by reviewing the terms, especially reducing interest rates to 5 percent with 2 years moratorium. Manufacturers that are investing in order to scale up production should be granted loans at 5 percent interest rate for a period of 5 to 7 years.”
On the recent hike in electricity tariffs and pump price of petrol, Ahmed said that manufacturers are not averse to the increase as long as necessary measures are in place to ensure efficiency and fairness.
“The problem, particularly for manufacturers is not just the tariff, it is availability. If we have available power supply on a steady basis, then we can afford to pay the tariff. Our stand is to improve electricity supply and ensure that we are paying for only what we consume and introduce systems that will ensure efficiency of the supply system.
“On fuel subsidy, MAN has always maintained that the subsidy is not good for the economy. We have seen this in diesel. When diesel was deregulated, it became more easily available and the price remained largely stable. This is what we believe should happen to all petroleum products.”