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Nigerian Manufacturers Groan As Unsold Inventory Rises Amid Forex Shortage

Manufacturing companies in Nigeria are having a difficult time as their inventory of unsold goods has skyrocketed amid foreign currency shortage.

As nations of the world put in measures to mitigate the impact of the coronavirus on their economies, unstable electricity supply, poor logistics, and other challenges have contributed to making the business environment in Nigeria rather unfavourable.

While manufacturers continue to encounter difficulties in getting foreign currency to import raw materials and spares that aren’t available in Nigeria, the impact of the Coronavirus-induced lockdown has severely affected consumers’ purchasing power.

On Thursday, manufacturers said in Lagos that their inventory of unsold goods jumped to a record high with a value of 402.4 billion naira ($1 billion).

Mansur Ahmed, president of the Manufacturers Association of Nigeria, attributed the development consumers’ shrinking income.

Read: Buhari’s COVID-19 Economic Plan: Old Wine in New Wineskins

Ahmed added on Thursday that unreliable electricity supply is forcing members to spend more than 38% of their production costs on alternative power.

Last month, the National Bureau of Statistics (NBS) said Nigeria’s economy contracted by 6.10 per cent in the second quarter of 2020.

In its Gross Domestic Product Report for Q2 2020, the bureau said the decline was due to a contraction in domestic and international economic activity during the quarter—the periods between April and June 2020.

Nigeria implemented a nationwide shutdown in March, as parts of efforts to contain the spread of the coronavirus pandemic.

Domestic efforts that triggered the contraction ranged from restrictions of human and vehicular movement implemented in some states to a nationwide curfew, bans on domestic and international travel, closure of schools and markets etc., as well as partial and complete closure of companies and industries.

 

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