From OKORO CHINEDU in Lagos, Nigeria
LAGOS, (CAJ News) – THE country’s manufacturing sector is projected to continue its downward trend since the June launch of the new foreign exchange regime by the Central Bank of Nigeria.
Analysts noted since the launch, the local Naira currency had depreciated considerably.
“Until stability in fx (foreign exchange) supply is achieved, the manufacturing sector is likely to continue to suffer,” First Bank of Nigeria (FBN) stated on Thursday.
Under prevailing challenges, the bank expected the growth of the manufacturing sector to be flat in the last quarter of the year.
FBN pointed out given the strain the fx scarcity had placed on the sector , this week the CBN directed commercial banks to allocate 60 percent of their fx sales to manufacturers.
Nonetheless, FBN stated, this should help alleviate some of the pressure.
Nigeria’s manufacturing sector accounts for just 10,6 percent of the country’s total GDP.
In the past eight quarters it has grown at an average of 2,5 percent.
The country’s economic downturn has hit the sector such that there has been a steady contraction since the first quarter of the year.
For manufacturers heavy on imported inputs, the fx scarcity has forced them to source fx from the parallel market at a premium to the interbank rate.
“This has resulted in a drop in output as manufacturers have struggled to maintain their profit margins as they try to pass on their higher input cost,” FBN stated.
– CAJ News