In the latest report from the Manufacturers Association of Nigeria (MAN), the manufacturing sector in Nigeria has witnessed a significant rise in job losses, reaching a 3-year high in the first half of 2023. According to MAN’s semi-annual review, the number of lost jobs surged by 108.7 percent to 3,567 in H1 2023, compared to 1,709 in the same period of 2022. Additionally, it marked a 31.7 percent increase compared to H2 of the previous year when 2,708 jobs were lost.
In contrast, job creation in the sector declined by 32.8 percent, with only 6,428 new jobs in H1 2023, down from 9,559 in H1 2022.
These alarming statistics highlight the adverse effects of hasty policies and the lingering impact of currency redesign, leading to a challenging business environment and a concerning rise in unemployment.
Femi Egbesola, the national president of the Association of Small Business Owners of Nigeria (ASBON), expressed concerns about the hardships faced by Micro, Small, and Medium Enterprises (MSMEs) in the manufacturing sector, with approximately 25 percent of businesses closing this year.
The deteriorating employment situation is a concerning trend, particularly for a country with over 200 million people. The challenges in the manufacturing sector are contributing to rising unemployment rates, impacting both workers and the nation’s infrastructure.
These job losses come as Nigeria grapples with economic reforms, including currency devaluation, which has led to a depreciation of the naira and increased costs for businesses and households. The high cost of foreign exchange, coupled with a 7.5 percent value-added tax on diesel imports, has further fueled inflation, reaching an 18-year high of 25.08 percent in August.
While there are some signs of marginal improvement in business activity, as indicated by the Purchasing Managers’ Index, the overall employment outlook remains bleak. The aggregate Manufacturers CEO’s Confidence Index reflects a deteriorating employment situation, indicating the urgent need for coordinated efforts to address the challenges faced by the manufacturing sector.
The manufacturing sector, traditionally a significant job creator in the Nigerian economy, is now struggling due to factors such as high diesel costs and foreign exchange issues. As a result, its growth rate in Q2 2023 hit a three-year low at 2.2 percent, signaling challenging times ahead.
Economists warn that these conditions may worsen in the second half of the year, posing further challenges to Nigeria’s economic recovery efforts. The Nigerian Association of Small and Medium Enterprises has already reported the closure of about 10 percent of the country’s 40 million MSMEs since the subsidy removal, adding to the economic woes.
The situation in Nigeria’s manufacturing sector calls for immediate attention and effective policy measures to revive this vital sector and curb the escalating job losses that are impacting millions of livelihoods.
