The Lagos Chamber of Commerce and Industry has urged manufacturers in Nigeria to improve on their backward integration efforts.
Financial Street recalled that the Manufacturers Association of Nigeria had, in a statement last week, said the inventory of unsold manufactured goods increased to N303.22bn in the second half of 2020 from N202.16bn in the corresponding half of 2019.
Reacting to this, the Director-General of LCCI, Mr Muda Yusuf, in a telephone interview with our correspondent on Sunday, said with the situation of the exchange rate which might not improve soon, prices of raw materials had been on the increase.
“For the manufacturers, I think they should also begin to look at how they can begin to improve on their backward integration. Because of the situation of the exchange rate which is not likely to come down any time soon, the cost of importation of raw material has been increasing; so, it has also affected their prices,” he said.
He blamed the recession the country experienced last year as the reason MAN recorded a high number of unsold manufactured goods.
Yusuf noted that the lockdown caused by COVID-19 affected the purchasing power of the people.
He said, “The economy was down in 2020; we had a recession in 2020, pandemic, lockdown and restrictions in movements. For almost one year now, some sectors are either in total or partial lockdown.
“All of these affected purchasing power; since the economy was not been doing well, there was no employment. There were lay-offs of staff. So, the purchasing power became so weak, and unfortunately, prices were also rising which is a double joepardy.”
The LCCI boss also stressed the need for the manufacturing sector to focus more on resource-based industrialisation.
He said, “I think the bigger issue here is about the macroeconomic environment itself. With the easing of lockdown and the reduction in the COVID-19 problems all over the world and with the improvement in the crude oil prices and with the fact that we have exited recession, we expect that things will be more positive this year. The purchasing power is likely to begin to improve, and economic activities generally are likely going to improve.
“We can have a gradual reorientation in the sector and focus more on resource-based industrialisation. Having import substitution, more of local sourcing of raw materials as fast as possible will also help the situation.”
Yusuf advised the government to reduce the tariffs on imports to enable the manufacturers to compete effectively.
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