Manufacturers Association of Nigeria (MAN) said its record of unsold goods in 2016 is the highest the association has ever had since its inception.
The group’s President, Dr. Frank Jacobs, who disclosed this yesterday said members’ inventory — unsold goods — in 2016 was worth N100 billion as capacity utilisation averaged 40 percent.
Adding that there will be further job losses this year. The increasing number of unsold goods by manufacturers is a reflection of lower purchasing power and portends job losses and lesser private sector capacity to create jobs this year.Jacobs said.
“The trend only shows that capacity utilisation will remain stagnant — or even lower — while new jobs may not be created except demand increases.”
Mrs. Omolara Aromolaran, who manages the Crown Natures Nigeria Plc., a textile and apparel outfit, agreed with the MAN President, saying, “Unsold goods mean that capital is being tied down even as projections are not being met.”
Mrs. Aromolaran argued that government has not done enough to create a better environment for job creation.
The Central Bank of Nigeria (CBN) has, however, promised that the regulator would guard against inflation and price instability. “The inventory build-up is as result of recession.”
The apex bank spokesman, Isaac Okoroafor said:
“In times of economic downturn, demand is low and you do not expect the warehouse to clear; so it is a normal thing.”
The Nigeria Labour Congress (NLC) has urged the government to improve infrastructure, especially electricity, to help manufacturers attain profitability and retain jobs.
The Chairman of NLC in Lagos, Comrade Idowu Adelakan, said government’s agenda for job creation in 2017 would suffer a setback if the trend continues.
Data from the manufacturers association showed that productivity in the real sector was grossly undermined, as members were not able to optimise production capacity following their inability to import requisite raw materials.
The inventory of manufactured goods in the sector stood at 16.14 per cent in 2016 from 13.7 per cent recorded in 2015.
The sector recorded N55 billion unsold goods at the end of the first half of 2016, with collated data for the remaining part of the year showing negative profile due to prolonged economic recession.
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A review of the period between 2011 and 2016 showed that manufacturers had a backlog of an inventory between 2014 and 2015, which further spilled into 2016. In 2014, the inventory recorded was N60.6 billion; N45.9 billion in 2015 while recession impacted heavily on sales in 2016 as the inventory hit about N100 billion.
Already, a total of 12,400 jobs were lost in the sector in 2016, while the total number of factory closedowns was about 50 according to MAN President, Dr. Frank Jacobs even as a greater number of companies operated skeletally in 2016.