Naira Devaluation Triggers Inflation in Nigeria

The devaluation of naira is adversely impacting on the Nigerian manufacturing sector as manufacturers lament high cost of production.

According to sectoral players, the attendant impact of plunging oil price, already sending economic and political shockwaves around the world and the devaluation of the naira are spiking the cost of production.

For instance, the Manufacturing Association of Nigeria (MAN) is already exploring ways to mitigate the consequences of the anticipated economic backlash.

The MAN hurriedly summoned an emergency meeting of its Economic Policy Committee (EPC) in Lagos to discuss the issues and the way forward. Sources revealed that members lamented the severe impact of the erosion of the Nigerian Naira’s purchasing parity on their business and the attendant increase in prices of their raw material, machineries, spare parts and all other import-dependent procurements.

The meeting, it was learnt, reviewed the present scenario and concluded that it has led to very significant increase in the cost of production, leading to uncompetitiveness of local products especially in the face of the impending implementation of the ECOWAS Common External Tariff (CET) in January 2015, which will allow goods from any other part of west Africa move into Nigeria without the imposition of any form of tax, import duty or levy.

A resolution of the meeting stumble upon by our correspondent quoted the MAN members as saying “we are forced to raise the prices of our products because our cost of production has gone up significantly due to the devalued naira but also our customers have been affected by the downturn in the economy may now be unable to buy up these products, leading to increased inventory in our factories and then all the attendant problems.”