Unsold Completed Items Now N1.24trn – MAN
The worth of unsold completed items stock has surged by 42.93 share factors within the first half of 2024, reaching 1.24 trillion in opposition to 869.37 billion recorded on the shut of 2023, the Producers Affiliation of Nigeria (MAN) has disclosed.
The affiliation additionally hinted that producers incurred greater than 730 billion in capital bills throughout the interval.
MAN in a press release signed by the Director Normal, Segun Ajayi-Kadir, blamed the developments on the continual rise in rates of interest imposed by industrial banks.
The affiliation was reacting to the rise of rate of interest on the 297th assembly of the Financial Coverage Committee (MPC) of the Central Financial institution of Nigeria (CBN) held on September 23-24, 2024.
In response to MAN, the choice to lift the MPR to 27.25% has far-reaching implications for the manufacturing sector in Nigeria.
Ajayi-Kadir identified that the continued enhance in rates of interest, which now totals 15.75 share factors since Might 2022, would compound the challenges confronted by the sector, together with rising manufacturing prices within the face of declining shopper buying energy.
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“With the rise in borrowing prices, producers will now pay over 35% on their credit score amenities. Clearly, it will result in enhance in manufacturing prices, larger costs of completed items, decrease competitiveness and manufacturing capability enlargement. The influence of upper rates of interest goes past compounding the challenges of producers, it stifles alternatives for funding in essential areas corresponding to expertise, retooling, and enlargement throughout the manufacturing sector.
“Producers will, all of the extra, be compelled to decide on servicing present credit score amenities over enlargement and funding in new product strains. As an example, over the primary six months of the yr, producers incurred greater than 730 billion in capital bills as a result of steady rise in rates of interest imposed by industrial banks,” he mentioned.
He mentioned information from the primary half of the financial assessment revealed by MAN revealed a troubling development, saying “The worth of unsold completed items stock surged by 42.93 share factors, reaching 1.24 trillion in comparison with 869.37 billion on the shut of 2023.”
The DG mentioned the rising stockpile of unsold merchandise “underscores the difficulties producers face in a weakening market.”
“In broad phrases, MAN is fearful concerning the implications of the continual price hikes on the productive sector and earnestly expects the CBN to cease the speed hike however discover extra of the monetary-fiscal coverage handshake choice to curb inflation,” he submitted.
The physique, nonetheless, requested the CBN to conduct a complete assessment of the consequences of steady price hikes on inflation and the actual sector over the previous 5 years to information future selections.
It additionally requested the federal government to speed up the disbursement of the N1trillion single-digit mortgage within the accelerated stabilization and development plan for the manufacturing sector to cushion the influence of the excessive MPR on borrowing prices.
