The Manufacturers Association of Nigeria  (MAN) has said  the rising inflationary profile of the  country  is gradually taking its toll on operations of the manufacturing sector, and may sound the death knell of the sector anytime soon.

 

The association in a statement, issued by its Director General, Segun Ajayi-Kadir, on Wednesday, listed some of the implications of the present inflationary pressures on the sector  as: increase in cost of production,  reduced profit margin, supply chain disruptions, uncertainty in planning and reduced consumer spending.

 

MAN argued that with the rising inflation, and its attendant higher costs of raw materials, labour, and other production inputs, manufacturers might find it more expensive to procure resources, necessary for their production processes, thereby squeezing  their profit margins.

 

“As costs increase due to inflation, manufacturers might struggle to pass on these cost increases to consumers in the form of higher prices. This will result 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,” the association stated.

 

It also expressed the fear that manufacturers will continue to find it challenging to make long-term business plans due to unpredictable cost fluctuations, demand, and overall economic instability.

 

MAN stated further that the present high inflation  will reduce consumers’ purchasing power, leading to decreased demand for products.

 

“As prices rise, consumers are cutting back on discretionary spending, including manufactured goods. This leads to decreased demand for products which adversely affects manufacturers’ sales,” the association stated.

The association, therefore, called for a coordinated effort from various stakeholders, including the government, central bank, private sector and the civil society in addressing the issue of inflation.

 

MAN also urged the CBN to strive towards achieving  a stable exchange rate by  implementing effective exchange rate policies that will prevent sharp depreciation of the currency, and address the problem of free fall of Naira in both official and parallel markets.