Naira depreciation spurs 32.56% investment rise, jobs plunge 37.83%

The depreciation of the naira under President Bola Tinubu’s administration in 2023 has resulted in mixed outcomes for the manufacturing sector.

While investments surged by 32.56 percent, employment generation plummeted by 37.83 percent, and capacity utilization declined by 1.3 points to 55.1 percent, down from 56.4 percent in 2022.

Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria (MAN), highlighted these trends during the presentation of the 2023 Annual Report at the association’s 52nd Annual General Meeting. He noted that total investment in the sector rose to N429.47 billion in 2023, up from N323.98 billion in 2022, indicating a 32.56 percent increase. However, the total number of jobs created in 2023 fell to 10,133, a significant decline from the 16,300 jobs reported in the previous year.

Ajayi-Kadir explained, “The manufacturing sector saw investment growth in naira terms during the second half of 2023, reaching N236.57 billion, an increase from N192.89 billion in the first half of the year. This represents a substantial rise of N43.68 billion, or 22.65 percentage points, when comparing the two periods.

“The accumulated investment for the entire year of 2023 reached N429.47 billion, reflecting an increase of 32.56 percentage points, or N105.49 billion, compared to the N323.98 billion recorded in 2022. This upward trend in monetary investment during the review period was largely driven by the devaluation of the naira.”

However, the MAN DG also addressed the impact of the naira redesign policy in early 2023 and the effects of the new administration’s policy changes, including the removal of fuel subsidies and the unification of the exchange rate on the manufacturing sector.

“The sector experienced a notable decline in employment generation in the second half of 2023, with jobs created falling from 6,412 in the first half to 3,721, a 41.97 percent decrease. Overall, the total jobs created for the year stood at 10,133, representing a 37.83 percent reduction compared to the 16,300 jobs recorded in 2022.

“A considerable number of manufacturing firms ceased operations during this period, further intensifying the pressure on employment rates.

“Capacity utilization also saw a decline, dropping from 56.5 percent in the first half of 2023 to 53.6 percent in the second half, indicating a 2.9 percentage point reduction. Consequently, the average capacity utilization for the year decreased to 55.1 percent from 56.4 percent in 2022, reflecting a 1.3 percentage point decline,” Ajayi-Kadir added.