Nigeria faces the looming shutdown of more manufacturing companies and businesses due to the ongoing energy crisis, exacerbated by diesel prices soaring to over N1,100 per litre. This dire situation is further compounded by a foreign exchange crisis and a depreciating currency, all amidst decreasing purchasing power.
Stakeholders warn that the prices of Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG), alternative energy sources, may also rise, with the Nigerian Association of Liquefied Petroleum Gas Marketers stating that a 12.5kg cooking gas cylinder could reach N18,000 from the current N10,000, TheGuardian reported.
The persistent energy crisis has already led to a high number of factory closures annually due to power shortages and adverse economic conditions. Urgent actions are required to prevent further job losses and revenue declines in the sector, which could negatively impact Nigeria’s economic growth and its contribution to Gross Domestic Product (GDP).
This crisis has been compounded by the Central Bank of Nigeria’s (CBN) Naira redesign policy, resulting in increased production and distribution costs for manufacturers. Capacity utilization has plummeted, employment has dropped, and sales volume has declined. Manufacturers cite high energy costs, high credit costs, multiple taxes, forex scarcity, and poor forex allocation as major challenges.
Nigeria’s unreliable electricity grid and the need for alternative energy sources have forced manufacturers to spend nearly N1 trillion on energy sourcing in the last seven years. With an average of 95 manufacturing companies closing each year, over 4,451 job losses occur annually in the manufacturing sector alone.