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Cash scarcity caused 30% dip in cement demand— Manufacturers

Published

1 year ago

September 16, 2023

Nigerian manufacturers have revealed that demand for cement dropped by 30 per cent in the country during the period of its cash scarcity earlier this year.

The Manufacturers Association of Nigeria (MAN) in a ‘Special Focus’ of its Manufacturing CEOs Confidence Index, said the lack of access to cash during this period led to a 20 per cent drop in sale of consumer goods.

In its report, MAN insisted that the Central Bank of Nigeria did not need to aggressively pursue policy changes or hasten the country’s transition to a cashless economy.

With sale of consumer goods and cement falling by around 20% and 30%, respectively, the protracted crisis nearly bankrupted manufacturing enterprises.

Nigeria’s Central Bank, in November 2022, introduced new designs of the N200, N500, and N1,000 notes in an attempt to bring currency from outside the banking system into the banking system, thereby making monetary policy more effective in combating inflation. But the situation boomeranged with the shortage of cash and alleged hoarding of the old notes and unavailability of the new ones.

The report also highlighted the need for government intervention to stabilise the currency and create a more favourable business environment. It suggested measures such as providing access to affordable credit, improving infrastructure, and implementing policies that promote local production.

These steps would not only help manufacturing companies recover but also stimulate economic growth and job creation. It is crucial for policymakers to address these issues promptly to prevent further damage to the manufacturing sector and ensure a sustainable recovery.

The report read in part, “The substantial reduction in money velocity left opportunity for speculation and ignited the creation of a naira black market that compounded the woes of manufacturers already plagued by insufficient forex.

“The naira scarcity clearly wiped out numerous small and medium manufacturing businesses whose transactions were cash-based, especially those within the agro-allied industries who regularly deal with local farmers in remote towns where no formal banking is in sight. More unfortunately, the exorbitant POS charges on such cash constrained the operations of resilient manufacturing SMEs and worsened their cost of doing business.” the report concludes.

Related Topics:Cash scarcity Featured Nigeria

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

10 hours ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”

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Tanzania tells IMF economy projected to grow by 6% in 2025

Published

11 hours ago

December 20, 2024

Ifeoluwa Dada

Tanzania’s economy is expected to grow by about 6% in 2025 from an estimated 5.4% growth in 2024, its finance minister and central bank governor said in a letter to the International Monetary Fund (IMF).

Some of the potential risks to the performance in the near term would include intensification of regional conflicts, increased commodity price volatility, a global economic slowdown and natural disasters related to climate change, Finance Minister, Mwigulu Nchemba, and Central Bank Governor, Emmanuel Tutuba, said.

Real GDP increased by 5.3% in 2023 from 4.7% in 2022, propelled by private investments on the demand side and manufacturing, construction, and agriculture on the supply side.

Strict monetary policy and moderate food and energy prices contributed to the decline in inflation from 4.3% in 2022 to 3.8% in 2023. In 2023, the Tanzanian shilling lost 8% of its value due to a lack of foreign exchange.