The Manufacturing Association of Nigeria has said that consumers’ low purchasing power is reason for the low demand for locally manufactured products, and had led to unsold inventories in many companies.
The Director, Mr Oruche Ambrose, stated this on Wednesday.“The consumer’s purchasing power is being eroded by rising inflation and the effective demand is not there, which is why there are piles of unsold goods in the warehouses,” Ambrose was quoted as saying in a report by MoneyCentral.
He explained that the ability of companies to pass on spiraling costs to the already beleaguered final consumers depend on the elasticity of the products.
According to Ambrose, inventory of unsold manufactured goods in the sector totaled N577.61bn in 2020 as against N402.42bn recorded in 2019, and that the average turnover ratio for companies was 4.21 times, which indicated they sold their entire goods within an 86.62-day period.
Similarly, the organisation’s President, Mansur Ahmed, noted, “The implication of the challenges highlighted is that it impedes the growth and development of the manufacturing sector, thereby affecting the attainment of the sector’s full potential for massive job and wealth creation.”
In 2020, the report by MoneyCentral showed that Dangote Cement Plc incurred N146.34bn on fuel and power, which represented 19.2 per cent increase from N122.85bn recorded in 2019.
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