The Nigerian manufacturing sector recorded a staggering N466 billion net foreign exchange loss in the first nine months of 2023, as the forex market regime took a heavy toll on the industry.
According to sector operators, the forex crisis worsened the already challenging situation caused by the removal of oil subsidy, the Russia/ Ukraine war, and other unfavourable factors.
They said the sector was bleeding from multiple sources due to the exchange rate revaluation losses.
A Financial Vanguard analysis of the financial statements of the top 17 manufacturing companies listed on the Nigerian Exchange Limited (NGX) revealed that their gross earnings increased as they raised their product prices, but their profits plummeted due to the multiple pressure points undermining their financial stability.
The data showed that the net foreign exchange loss of the firms soared by almost 400% to N466.02 billion in the period ended September 2023 (9M’23), compared to N93.219 billion loss in the same period of 2022 (9M’22).
The data also showed that the combined gross earnings of the firms rose by 23.4% to N4.4 trillion in 9M’23, up from N3.6 trillion in 9M’22, while their combined Profit Before Tax (PBT) dropped by 24.6% to N505.148 billion in 9M’23, down from N670.089 billion in 9M’22.
The impact of the forex crisis was evident in the rising cost of producing consumer goods, which are mostly essential items used by households.
These include foods and beverages, toiletries, over-the-counter medicines, cleaning and laundry products, plastic goods, and personal care products, among others.
Data from the National Bureau of Statistics (NBS) showed that the inflation rate in Nigeria closed 9M’23 at 26.72%. The figure has since increased to 27.3% as of October 2023 and is expected to climb further this month, possibly till the end of the year.