The Manufacturers Association of Nigeria (MAN) says that it has become necessary for  stakeholders comprising the government, central bank, private sector, and civil society to address how best to bring the rising inflation in the economy under control.

As reported by the National Bureau of Statistics (NBS), in July 2023, Nigeria experienced a surge in inflation, with the rate reaching a new 18-year high of 24.08 percent.

This marks an increase of 1.29 percent from the previous month’s rate of 22.79 percent.

Segun Ajayi-Kadir,
Director – General of MAN, said that it’s important to note that addressing inflation is a complex and long-term endeavor that requires a coordinated effort from various stakeholders, including the government, central bank, private sector, and civil society.

He believes that the combination of  recommendations from the stakeholders, can help mitigate inflationary pressures and promote sustained economic growth.

Commenting on the inflationary impacts on the manufacturing sector, he said that it has leads to decreased demand for products which adversely affects manufacturers’ sales.

” As you would expect, the current inflationary condition in Nigeria is adversely affecting the operation of the manufacturing sector, just like most other sectors of the economy.

Some of the impacts of the rise in inflation on manufacturing include:

▪︎Increase in the cost of Production: Rising inflation often leads to higher costs of raw materials, labour, and other production inputs.

▪︎Reduced Profit Margin: As costs increase due to inflation, manufacturers might struggle to pass on these cost increases to consumers in the form of higher prices.

This  results in reduced profit margins, especially as it is becoming more difficult to pass the burden to the consumers as a result of income squeeze leading to price resistance.

▪︎Supply Chain Disruptions: Inflation is disrupting supply chains, making it difficult for manufacturers to obtain necessary materials and components.

This will lead to delays in production and potentially halt operations as key supplies become scarce or unavailable.

▪︎Uncertainty in Planning: Inflation introduces a level of uncertainty in economic conditions. Manufacturers will continue to find it challenging to make long-term business plans due to unpredictable cost fluctuations, demand shifts, and overall economic instability.

▪︎Reduction of Consumer Spending: High inflation often reduces consumers’ purchasing power. As prices rise, consumers are cutting back on discretionary spending, including manufactured goods. “