Nigeria's manufacturing sector performed dismally in 2016 according to data released by the Central Bank of Nigeria (CBN)

The data appear to back claims made last year by the Manufacturers Association of Nigeria (MAN) that the CBN's flexible exchange rate policy, caused substantial losses for manufacturers selling on letter of credit (L/C) terms (DC World News, 30 November 2016).

Manufacturing decline

The industrial sector recorded a general decline between January and November as indicated by the CBN's Purchasing Managers Index, which is based on five major indicators - new orders, inventory levels, production, supplier deliveries and the employment environment.

According to CBN data, 272 firms went out of business while many more produced less, cut staffing levels or reduced wages.

Business impediments

Industrial capacity utilisation declined by 20 per cent during 2016 while MAN classifies more than half of Nigerian manufacturers still trading as 'ailing'.

As well as the acute scarcity of foreign exchange that restricted the ability of manufacturers to import raw materials on L/C terms, Nigerian manufacturers also had to contend last year with expensive energy costs, unreliable power supplies, poor transport infrastructure and high interest rates.

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