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By Victor Ahiuma-Young
Manufacturers under the aegis of the Association of Food, Beverage and Tobacco Employers, AFBTE, have indicated that its operating environment in Nigeria is worsening.
It cited excessive taxes and levies, high interest rate, insecurity, poor infrastructure and unstable power supply as major threats to business survival.
The employers warned that despite recent macroeconomic reforms and signs of economic stabilisation, manufacturers are still grappling with rising production costs, weak consumer purchasing power and shrinking profit margins.
Speaking, AFBTE President, Mr. Chinedum Okereke, said many businesses were under severe pressure as a result of economic and structural challenges confronting the country.
He stated: “The past year, like those before it, presented both opportunities and challenges for businesses. While there were some positive developments and policy tailwinds, there were also significant pain points that affected the industry.
“Businesses continued to grapple with the lingering effects of the COVID-19 pandemic, the removal of fuel subsidy, the floating of the naira, and other policy changes introduced since 2023.
“These developments triggered macroeconomic volatility, weakened purchasing power, increased production costs, and led to reduced investments, capital flight, and in some cases, partial or complete closure of businesses.
“One disturbing experience is the limited impact of the improvements recorded on the micro-economic front; more pointedly, its lack of positive effect on poverty reduction especially the general welfare and standard of living of the people,” he said.
Okereke identified high borrowing costs as one of the major constraints to industrial growth, saying “The high cost of borrowing also remained a major challenge for businesses. These huge increases over time in the past translated to high cost of borrowing, that is, high interest rates, a development which evidently increased the debt burden of businesses and in like manner reduced their margins.
“Although the exchange rate situation has improved compared to previous years, the cost of foreign exchange remains high.
“Businesses also continue to suffer from the long-term effects of the naira depreciation, which significantly increased production and operating costs,” he noted.