"18-year high inflation leave Nigerian firms with $1bn goods unsold"

" 18-year high inflation leave Nigerian firms with $1bn goods unsold \r\n\r\nNigerian companies have an inventory of unsold goods approaching Covid-19 pandemic levels, as rising inflation makes them unaffordable in a country where more than half the 200 million population struggles to make ends meet.\r\n\r\nThe value of unwanted products held by Nigerian producers jumped 22% to 470 billion naira ($1 billion) by the end of 2022, according to the Manufacturers Association of Nigeria. That\u2019s the highest in the last five years except for 2020, when coronavirus lockdowns were in force.\r\n\r\n\u201cThe high inventory is attributed to low purchasing power in the economy, following the continuous increase in inflationary pressures,\u201d Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria, said by phone. \u201cPrices of fuel, particularly diesel, rose by over 50%, while the cost of transportation logistics including shipping escalated.\u201d\r\n\r\nNigeria\u2019s inflation has risen persistently over the last nine months to 22.2% in April, despite a more than 700 basis-point hike in interest rates. Food inflation is even higher at 24.6%, with both measures of cost of living at the highest level since September 2005.\r\n\r\nThe price index is also under pressure as producers raise prices above the reach of most consumers to cover the rising cost of inputs caused by the Russia\u2019s invasion of Ukraine, a weakening currency and higher cost of finance.\r\n\r\nNigerian producers, of which more than 3,000 are registered with the manufacturers union, have struggled to survive over the past three years. The sector\u2019s growth slowed for the third consecutive period to 1.6% in the first quarter of 2023.\r\n\r\nThe Central Bank of Nigeria\u2019s plan to replace high-denomination banknotes to promote electronic-based payments, mop up excess cash liquidity and take control of money supply led to acute cash shortages in the last quarter of 2022 and first three months of this year, because of a scarcity of new bills. That weighed on consumer demand before an extension of the deadline to year-end led the central bank to increase supply.\r\n\r\n\u201cThe withdrawal of large amounts of the old naira without commensurate replacement with the new notes resulted in a cash crunch in the economy, with very limited means of purchasing items by households,\u201d the DG said. \u201cThis particularly affected the manufacturing sector, as it was extremely difficult to sell most fast-moving consumer goods and other commodities,\u201d he said."

"18-year high inflation leave Nigerian firms with $1bn goods unsold"

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