Consumers Income Dips As Inventory Of Unsold Manufactured Goods Hit N402bn
The stock of unsold manufactured products has risen to an all-time high of about N402.4 billion due to the dwindling income of consumers in the country, the Manufacturers Association of Nigeria has said.
According to the President of the association, Mansur Ahmed, at a briefing on Thursday, the decline is attributed to the impact of the COVID-19 pandemic on households and businesses.
Mr Ahmed explained that the effect of the lockdown, near shut down of the operations of 8 manufacturing sectoral groups, distruption in supply chain, inventory of unsold items and loss of jobs had a major outcome on member-companies.
He maintained that the association will support its members in exploring expansion opportunities through strategic partnerships.
“The performance of the economy so far in 2020 has been fragile and slowly sliding into recession as the case is globally.
“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.”
He stated that the Federal Government to “reverse the Value Added Tax Rate back to pre-2020 Finance Act rate and reduce the Personal Income Tax to a flat rate of 10% for one-year effective April 2020.
This he said, will “improve the disposable income of Nigerian workers, stimulate consumption, promote an upsurge in demand, and increase production output.”
The M.A.N president also noted that access to foreign exchange has been another major issue.
“Manufacturers are increasingly finding it difficult to source foreign exchange for the importation of raw materials, machinery, and spares that are not available locally.
He stated that the Federal Government should “prevail on the Central Bank of Nigeria (CBN) to extend its COVID-19 Stimulus packages to manufacturers not covered by existing CBN initiatives, and also grant manufacturers increased access to Foreign Exchange at pre COVID-19 rate to support the importation of raw materials, machines and spares that are not available locally.”
N67.38bn Spent On Electricity Cost.
Another issue raised by Mr Ahmed is the means of sourcing for power by member countries.
He revealed that a total of N67.38 billion was spent on self-generated electricity in 2019 and the government has pledged to help resolve it; one of which is through the electricity tariff hike.
“Inadequate electricity supply and incessant increases in tariff without commensurate improvement in generation, transmission and distribution remain key challenges.
“The manufacturing sector spent over N67.38b on self-generated electricity with energy cost accounting for over 38% of production cost in 2019.
Going forward, he stressed that the financial pressure on companies should be reduced by compensating manufacturing concerns that are forced to shut down with 60% of employees’ salaries for at least three months to prevent laying offs of employees and massive unemployment.
He also called for the support of manufacturers by reviewing interest rates terms of existing loan facilities by 5% with 2years moratorium.
“For manufacturers that are investing in order to scale up production should be granted loans at 5% interest rate for a period of 5 to 7 years.
“These will no doubt improve liquidity and ramp up productivity in the manufacturing sector in a manner that will cover up for obvious losses due to COVID-19,” he reiterated.