Growing real estate investment, input cost increase cement price

Growing investment in real estate as an alternative asset for Nigerians looking for where to hedge their funds against inflation is a major reason for the rising price of cement, BusinessDay findings have shown.

READ ALSO: MSMEs Contribute Over 50% Of Nigeria’s GDP, 80% Employment ― FG

High input cost, product scarcity or limited supply arising from shocks in the economy and disruptions in production activities is another reason for the current hike in cement price.

Nigeria is experiencing what is clearly a galloping inflation. Its March inflation figure at 18.17 percent is an embarrassment to economic analysts. Apart from eroding the value of the local currency, this has also affected food prices and crimped household/consumer purchasing power significantly.

By its nature, real estate, unlike other investment asset classes, appreciates in value over time, virtually unaffected negatively by inflation. Rather than depreciate and lose value in inflationary periods, real estate, in the worst case scenario, remains static in value.

This explains why the rising price of cement is not deterring or stopping investment in the sector.

“The knowledge of real estate as a means of financial security has attracted more players and investors into it, thereby affecting the demand and supply of cement in the country; real estate is one sector that can flow with inflation per time, hence a lot of Nigerians are currently investing in it,” Osazee Edigin, an estate developer, confirms to BusinessDay in Benin City.

Construction activities have been upbeat in the sector since the beginning of the last quarter. Ayo Ibaru, COO, Northcourt Real Estate, also confirms to BusinessDay that increased investment in real estate contributes to the rising price of cement, citing mid-income residential buildings springing up in Lagos on both Island and Mainland.

He also cites institutional investors that are doing both residential and commercial developments such as Purple Capital, which is doing mixed use developments in Lekki and Maryland in Lagos. All these push up demand for cement and, by extension, the price of the product.

But there are other reasons for the significant increase in price that cement buyers have seen. “Yes, we have seen increased demand arising from increased construction activities in real estate sector, but that is not the real cause of the price hike.


LCCI png

Nigeria’s economic recovery in Q2 depends on increased investment, non-oil sector – LCCI

The Lagos Chamber of Commerce and Industry (LCCI) has projected that Nigeria’s economy is expected to commence full recovery in the second quarter of 2021 following disruptions occasioned by the COVID-19 outbreak.

READ ALSO: Inflation widens negative real return on investment

The chamber, however, adds that this anticipated recovery will be driven majorly by the increased inflow of Foreign Direct Investments (FDI) and full utilization of the country’s non-oil sector.

Addressing journalists at the chamber’s quarterly press briefing on the state of the economy in Lagos, Toki Mabogunje, president, LCCI, said although Nigeria exited recession in the fourth quarter of 2020, it did not imply an end to the country’s economic woes as growth has remained fragile since then.

“Growth recovery should gain momentum starting from the second quarter of 2021, with oil sector in deep contraction due to suppressed production, fragile recovery in global oil demand, regulatory and investment climate issues, we expect the non-oil sector to drive growth in the year 2021,” Mabogunje said.

“However, major risks to economic growth include heightened security concerns, weak confidence of investors, relatively lower oil production and weak commitment to key policy, regulatory and institutional reforms,” she explained.

Read Also: Declining oil production signals more trouble for Nigerian economy

She said that increased inflow of investment is also critical to achieve economic growth, and urged that the federal government implement policy reforms that will attract investments and ease the business environment, particularly in addressing insecurity and multiple exchange rate windows in the country.

Mabogunje noted that there is a strong correlation between insecurity and investment, however, insecurity has worsened over time in Nigeria, causing the country to be perceived as an unsafe location for investments which scares prospective investors away.

She said if not promptly addressed, insecurity will continue to weaken the government’s efforts in attracting private investments into the country.

Other than the rising insecurity, she said the country’s foreign exchange policy direction needs to be clear and precise, noting essentially the need to unify Nigeria’s multiple exchange rates. She added that policymakers and financial regulators need to complement their activities and policies to avoid lack of cohesion.

She reasoned that the lack of cohesion among policymakers sends a negative signal to the investment community



Why SEC banned investment technology platforms from offering foreign stocks to Nigerians

  • Some big-name investment technology platforms that allow Nigerians to invest and trade in stocks listed on the Nigerian and foreign stock exchanges have been declared illegal by the Federal Government.
  • A circular issued on April 8 2021, by the Nigerian Securities and Exchange Commission warned unregistered investment tech platforms against providing foreign securities.
  • Chaka, Trove, Bamboo, and Risevest are among the investment tech platforms required to secure a license before continuing operations.

What’s the issue?

The Securities and Exchange Commission (SEC) on Thursday issued a directive on the “proliferation of unregistered online investment and trading platforms” in the country, declaring that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In other words, foreign stocks such as Microsoft, Tesla, Amazon, Netflix, which are currently not listed within Nigerian jurisdiction, should not be offered to Nigeria-based residents and businesses.

Why did SEC ban investment technology platforms from offering foreign stocks to Nigerians?

The SEC is using its jurisdiction to remind participants and investors that only approved securities can be sold to the Nigerian public.

Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, states that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In the circular issued, the SEC added that “CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth.

The Commission enjoins the investing public to seek clarification as may be required via its established channels of communication on investment products advertised through conventional or online mediums.”

According to Techcabal, the SEC’s action is within its powers, and in fact, these rules show that the investment-tech model of offering foreign stock to Nigerians is illegal. But this is hardly an indictment of these startups; it’s instead a reflection of how fast innovation moves.

Critics also say that the new directive by the SEC is because of the surging shares of big tech companies such as Amazon, Microsoft, Apple, Netflix and Google-parent Alphabet that have all led the market higher in recent weeks. Young Nigerians have been leveraging these new investment tech service providers to help diversify their portfolios, and with as little as $5, anyone can get in on the action happening outside the Nigerian Stock Exchange.

Who would be affected?


Inflation Rate

How to invest when inflation bites

Inflation is the general rise in the prices of goods and services over time. The “inflation rate” is the rate at which the change in prices happens; this is usually expressed in percentages over time.

Alice Abegunde, a mother of three teenagers, does not understand the reason behind the constant increase in the price of rice, her children’s favourite food.

READ ALSO: Afreximbank, NEXIM sign $50m deal to boost Nigeria’s trade sector

“Every time I go to the market, they have added to the price of rice,” Abegunde, 44, a resident of Lagos State, says.

While Abegunde might not be able to connect the dot and blame the rice sellers for the rise in price, Emeka Johnson could, he knew times were going to be hard as inflations numbers kept rising and resolved to save more and spend less.

What Johnson does not know is that he is constantly losing money because the value of his money drops as inflation rises.

What is inflation?

It is the general rise in the prices of goods and services over time. The “inflation rate” is the rate at which the change in prices happens; this is usually expressed in percentages over time. For instance, if inflation goes up 10 percent than last year, it means purchases will cost 10 percent more than they did last year.

Basically, inflation reduces the value or usefulness of money; the higher inflation rises, the less your money is worth, in real terms as time goes by. Therefore, it is about your purchasing power, that is, how much your money can buy.

What causes inflation?

There are reasons why prices rise. First, when everyone suddenly develops a taste for beef, the price of beef will rise. This follows a basic law in economics that, higher demand for a product will push up its price. This is also called demand-pull inflation.

What this means is that when the demand for goods and services in the economy exceeds the economy’s ability to produce them, their short supply places upward pressure on prices and gives rise to inflation.

Another reason prices rise is that the cost of producing goods and services increases. Companies would usually respond to higher cost of production by increasing the price they sell their products; they do this to cover the extra cost they incurred while producing. This is known as cost-push inflation.

How is inflation measured in Nigeria?

Every month we hear news about new inflation rate or data but have you ever wondered how it is calculated? Nigeria uses a well-known indicator called the Consumer Price Index (CPI), which measures the average change over time in prices of goods and services consumed by people every day.

In Nigeria, the CPI is calculated by the National Bureau of Statistics (NBS) and published every month. To calculate CPI, the NBS gets people to collect prices for thousands of items that an average Nigerian consumer buys such as food, prescription drugs, rent, petrol and many others. These items are grouped into categories called baskets. Every month, the NBS calculates the price changes of each item from the previous month and aggregates them to work out the rate for the CPI basket.

Who controls inflation?


ESME Money BootCamp

ESME Money BootCamp

Be a part of this 1-Day ESME Money BootCamp

Cost of food keeps increasing

Rent, Education, Healthcare didn’t stop either

READ ALSO: The Enugu Skill Up Project exercise.

The youth and #MSMEcommunities asked and we listened.

Insights from the gathered data tops that steady flow of income, cashflow, savings and investment opportunities is what the people want.

This is why on Saturday, 27th March 2021, the Head of Enugu SME Center, Hon. Arinze Chilo-Offiah and Tosin Olaseinde of the Money Africa will share the little known strategies of how money works, and help you understand financial trends.

Be a part of this 1-Day ESME Money BootCamp.

Register for FREE here:

Date: Saturday, 27 March 2021
Time: 9am- 3pm
Venue: Oaklands Hotel- Delta Hall

Equities Market

Equities market gains over N100bn as investors buy Zenith, GTBank, others

The record positive seen on Custom Street came as investors realise the equities market offers reentry opportunities for value hunters as prices of most counters hit record lows.

Trading on the floor of the Nigerian Exchange (NGX) Limited closed in green zone on Thursday as investors raised stakes in stocks like Zenith Bank Plc, Eterna Plc, GTBank Plc, Dangote Sugar Refinery Plc and Lasaco Plc.

READ ALSO: SMEDAN opens N5m loan application portal for SMEs

The record positive seen on Custom Street came as investors realise the equities market offers reentry opportunities for value hunters as prices of most counters hit record lows.

The All Share Index (ASI) of the Bourse stood higher by 0.54percent to close at 38,914.84 points, from 38,706.13 points recorded the preceding day.

The negative return year-to-date (YtD) stood lower at -3.37percent. This week alone, the equities market has increased by 0.69 percent, while this month it has declined by 2.22 percent.

Also, the value of listed stocks on the Bourse increased by N109billion, from the preceding day high of N20.251trillion to N20.360trillion.

Eterna Plc led the gainers league after its share price moved from N4.62 to N5.08, up by 46percent or 9.96percent.

Lasaco also advanced, from N1.2 to N1.3, up by 10kobo or 8.33 percent. Zenith Bank moved up from preceding day low of N20.5 to N22, up by N1.5 or 7.32percent.

GTBank rose from N28 to N29.8, adding N1.8 or 6.43 percent while Dangote Sugar moved from N16 to N17, up by N1 or 6.25 percent.

Unity Bank, GTBank, Zenith Bank and FBN Holdings were actively traded stocks on the floor of Nigerian Exchange (NGX) Limited. In 4,040 deals, investors exchanged 1,468,421,633 units valued at N5.853billion.


Tony Elumelu

Elumelu advocates strategic long-term investment to tackle poverty in Africa

Disturbed by the increasing rate of poverty in Africa, Tony Elumelu, founder of the Tony Elumelu Foundation (TEF), has called for a framework that will widen the circle of prosperity in the continent rather than littering it with lone star billionaires.

READ ALSO: More pain for Nigerians as inflation hits 4-yr high

Elumelu said Africa needs massive investments in infrastructure, electricity, digital technology and healthcare delivery to address the massive poverty in the continent, adding that future Bill Gates could come out of Africa if access to electricity is provided.

Speaking at the ‘World Government Summit Dialogue: Africa’s Future Post 2021’, Elumelu said the continent can see more billionaires spring up if only critical investments are made.

“The ones that are there are getting stronger climbing the league table while new ones are coming up. But we need to move the emphasis away from these so-called billionaires,” Elumelu said.

“We should be talking about how many young Africans will be impacted in the next five or 10 years’ time? Instead of us having a pyramid of few billionaires, I will prefer that we have a large base that has prosperity, happier people and people whose basic human needs are met. I think that is what will give us the sustainability and the lasting peace that we need in Africa,” he said.

Read Also: Deadline to Apply for the Tony Elumelu Foundation Entrepreneurship Programme Fast Approaching

“That will also address the insecurity that we have in Africa and stop the migration of our younger people. That will stem extremism and all the kidnappings we hear every day all around us because of poverty and hopelessness as people do not see a better future. We need to reset our mind to think in a better way to improve society and mankind,” he further said.

Elumelu noted that poverty anywhere is a threat to mankind everywhere and called for support for the development of entrepreneurship and SMEs so that the continent could address the challenge of poverty in a significant way.

“Without access to electricity, we cannot digitalise our local economies and communities where most of our people live. Also, this is significant in terms of informal businesses that drive the African economy.

“If we must empower our people out of poverty we must invest in electricity. The pandemic presents an opportunity for us to reprioritise and make sure that we invest in electricity. We must set for ourselves a timeline and the way we declared war on COVID-19, on polio is the same manner we need to declare war on poor access to electricity in Africa. For me, it is at the centre of poverty alleviation,” he said.

He also said strategic long-term investments by his business group, which he said is at the centre of his Africapitalism, is one of the ways to deal with poverty in Africa.

“That is the only way we can deal with the issue of poverty alleviation and create massive employment for our people. And that is the only way we can empower the economy.

“For us, investment in en, and we are looking at an integrated energy strategy because power cannot be dealt with in isolation. For us, the $1.1 billion investment that we made in January is to further help to achieve our vision for a prosperous Africa built on solid access to electricity for everyone. Africa at a time like this needs proper investment in power and access to healthcare for us to correct the poverty level we see on the ground,” he added.

Elumelu noted that the most significant contribution of the TEF’s entrepreneurship programme was the training it provides to young entrepreneurs on how to run prosperous businesses in Africa.


Mobile Money Business

The Rise Fund to Invest $200m in Airtel Africa’s Mobile Money Business at $2.65bn Valuation

Airtel Africa, a leading provider of telecommunications and mobile money services, with a presence in 14 countries across Africa, today announces the signing of an agreement under which The Rise Fund, the global impact investing platform of leading alternative investment firm TPG, will invest $200 million in Airtel Mobile Commerce BV (“AMC BV”), a wholly owned subsidiary of Airtel Africa plc (the “Transaction”). AMC BV is currently the holding company for several of Airtel Africa’s mobile money operations; and is now intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries.

READ ALSO: Registration for Auto Revamp Training Program

The Transaction values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt free basis.

The Rise Fund will hold a minority stake in AMC BV upon completion of the Transaction, with Airtel Africa continuing to hold the remaining majority stake.

The Transaction is subject to customary closing conditions including necessary regulatory filings and approvals, as necessary, and the inclusion of specified mobile money business assets and contracts into AMC BV.

The Transaction is the latest step in the Group’s pursuit of strategic asset monetization and investment opportunities, and it is the aim of Airtel Africa to explore the potential listing of the mobile money business within four years.

The Group is in discussions with other potential investors in relation to possible further minority investments into Airtel Money, up to a total of 25% of the issued share capital of AMC BV.

There can be no certainty that a transaction will be concluded or as to the final terms of any transactions.

The proceeds from the Transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.

Airtel Africa Mobile Money Services

Operating under the Airtel Money brand, Airtel Africa’s mobile money services is a leading digital mobile financial services platform catering to a large addressable market in Africa (characterised by limited access to formal financial institutions with limited banking infrastructure) and includes mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card and international money transfers.

Mobile money services are available across the Group’s 14 countries of operation, however in Nigeria the Group offers Airtel Money services through a partnership with a local bank and has applied for its own mobile banking licence.

It is the intention that all mobile money operations will be owned and operated by AMC BV.

In our most recent reported results for Q3, the mobile money service segment (corresponding to all the businesses that are intended to be transferred to AMC BV) delivered a strong operational performance:

  • Generated revenue of $110 million ($440 million annualised), and underlying EBITDA of $54 million ($216 million annualised) at a margin of 48.7%.
  • Year on year revenue growth for the quarter was 41.1% in constant currency, largely driven by 29% growth in the customer base to 21.5 million, and 9.7% ARPU growth.
  • Growth in transaction value was 53.0% to $12.8 billion ($51 billion annualised).

Our mobile money business benefits from strong network presence with our core telecom business through the extensive distribution platform of kiosks and mini shops as well as dedicated Airtel Money branches supplementing our extensive agent network, to facilitate customers’ assured wallet and cash.

We have a clear strategy to continue to drive sustainable long-term growth in Airtel Money with a focus on assured float availability, distribution expansion and increased usage cases for our customers.

In this year alone we have added partnerships with Mastercard, Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru and WorldRemit to expand both the range and depth of the Airtel Money offerings and to further drive customer growth and penetration.

The profits before tax in the full year ending 31 March 2020 and the value of gross assets as of that date, attributable to the mobile money businesses were $143.4 million and $463.2 million, respectively.

Key Elements of the Transaction

  • Agreement values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt free basis.
  • AMC BV, a wholly owned subsidiary of Airtel Africa, is currently the holding company for several of Airtel Africa’s mobile money operations; and is now intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries once the inclusion of the remaining mobile money operations under AMC BV is completed.
  • A newly incorporated investment vehicle of The Rise Fund will invest $200 million through a secondary purchase of shares in AMC BV from Airtel Africa. The transaction will close in two stages. $150 million will be invested at first close, once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed, with $50 million to be invested at second close upon further transfers.
  • Airtel Africa aims to explore the potential listing of the mobile money business within four years. Under the terms of the Transaction, and in very limited circumstances (in the event that there is no Initial Public Offering of shares in AMC BV within four years of first close, or in the event of changes of control without TPG’s prior approval), TPG would have the option, so as to provide liquidity to them, to sell its shares in AMC BV to Airtel Africa or its affiliates at fair market value (determined by a mutually agreed merchant bank using an agreed internationally accepted valuation methodology). The option is subject to a minimum price equal to the consideration paid by The Rise Fund for its investment (less the value of all distributions and any proceeds of sale of its shares, and with no time value of money or minimum return built in) and a maximum number of shares in AMC BV such that the consideration does not exceed $400 million.

The Transaction is expected to reach first close over the next three to four months. From first close The Rise Fund will be entitled to appoint a director to the board of AMC BV and to certain customary information and minority protection rights.



Bulk of young Nigerians shut out of N75bn youth investment fund

Bulk of young Nigerians eligible to apply for a loan from a N75-billion Nigeria Youth Investment Fund (NYIF) are stuck on the waiting list in what may scupper the government’s efforts to create badly needed jobs in Africa’s most populous nation.

READ ALSO: Stock market gains N128bn on renewed buy interest

Since it was set up in October 2020, only 395 youth had benefited from the Fund, which aims to financially empower Nigerian youth to generate at least 500,000 jobs between 2020 and 2023, as at January, according to the government.

In that time, 3 million youths applied for a loan which means only one in every 7,594 youths that applied for the loan was successful.

The number of youths that have applied till January implies that an average of 750,000 people apply every month, which means the number of applicants may have jumped to 4.5 million as at March. If the trend in disbursements is sustained, then only a fraction would have successfully applied.

While the list of beneficiaries has not been published, BusinessDay spoke with one of the applicants, who was frustrated over the delay in accessing the facility.

Amaefule Chinonmso, who is based in Port Harcourt, said he applied for the fund around October or November 2020.

Last month, he got a text message saying he was pre-qualified for the loan but had got no further feedback since then.

Data from the National Bureau of Statistics (NBS) show that Nigeria’s unemployment rate as at the second quarter of 2020 stood at 27.1 percent with the youth population accounting for about 64 percent of total unemployed Nigerians.

Channel for disbursement

Out of the over 800 microfinance banks in Nigeria, NIRSAL Microfinance Bank (NMFB) was chosen as the sole eligible participating financial institution for the disbursement of the Fund.

NMFB is a subsidiary of the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL plc), a non-banking financial institution established in 2013 by the CBN with a mandate to facilitate the free flow of affordable finance and investments to the agricultural sector.

Other loans offered by NIRSAL include The Agric, Small Medium Enterprise Scheme (AGSMEIS), Anchor Borrowers’ Programme, and NIRSAL Microfinance Bank Access Target Account, among others.

Who should access the youth fund?

According to the regulatory framework, eligibility criteria for accessing the Fund include, youth within the age bracket of 18-35 years, a youth that has business/enterprises domiciled and operational in Nigeria, has not been convicted of any financial crime in the last 10 years, has a valid Bank Verification Number (BVN), and possesses local government indigene certificate.

The framework stated that applicants currently enjoying NMFB loans, including the Targeted Credit Facility (TCF) and Agribusiness/Small and Medium Enterprises Investment Scheme (AgSMEIS) loans that remain unpaid are not eligible to apply.

Beneficiaries of other government loan schemes that remain unpaid are also not eligible to participate.

A huge percentage of youth are engaged in the informal sector. Accordingly, the NYIF will facilitate the transition of informal enterprises owned by youth into the formal mainstream economy where they can be supported comprehensively, build a bankable track record, and be accurately captured as active participants in economic development.

In addition, there is a need for the provision of a business plan summary or completed questionnaires as well as an Entrepreneurship Training Certification from the Federal Ministry of Youth and Sports Development (FMYSD) Entrepreneurship Development Institutes (EDIs).

For registered businesses, these are the requirements: Formal business enterprises (youth-owned enterprises), duly registered with the Corporate Affairs Commission (CAC), Business plan Summary or Completed Questionnaire, valid BVNs of Directors, Provision of Tax Identification Number (TIN), and Entrepreneurship Training Certification from FMYSD EDIs.

Amount you can access/collateral

As an individual or non-registered business, you can access up to N250,000, while as a registered business (Business Name / Limited Liability / Cooperative Societies/ Commodities Associations) you can have access up to N3,000,000. The interest rate under the intervention is 5 percent per annum (all-inclusive).

In terms of collateral, there is no collateral required but all assets purchased under the scheme must be registered with the National Collateral Registry (NCR). Also, the Global Standing Instruction (GSI) mandate will be activated to ensure full repayment by loan obligor.

How to access NYIF

First step requires applicants to attend compulsory entrepreneurship training with an approved Federal Ministry of Youth and Sports Development (FMYSD) EDIs. The second step takes successfully trained prospective applicants to NIRSAL Microfinance Bank (NMFB) portal to apply for the loan.

The third step requires eligible applicants to submit applications successfully on NMFB’s portal. Then, NMFB conducts loan assessment in line with Risk Assessment Criteria and programme guidelines, makes appropriate decisions and forward recommended applications to CBN for final approval.

Finally, the CBN reviews applications and gives final approval for disbursement to NMFB. The NYIF has a maximum tenor of not more than 5 years with a one-year moratorium.


Manufacturing sector

Investment in Nigeria’s manufacturing sector down 76% on COVID-19

The Nigerian manufacturing sector is still reeling from the effect of COVID-19 as investment inflow into the sector declined by 76 percent in 2020, according to the Manufacturers Association of Nigeria (MAN)

READ ALSO: GTBank to challenge Flutterwave, Paystack

In its H2 economic review, MAN revealed that in 2020, manufacturing investments dropped to N118.52 billion representing a 76 percent decline when compared to the N496.11 billion achieved in 2019.

The decline was attributed primarily to the outbreak of the Coronavirus pandemic which disrupted economic activities globally and locally.

“Manufacturing investment declined in the period following the depressing fallouts from COVID-19 that gave no impetus for new investments in the sector,” the report states

According to MAN, in H1’2020, the sector recorded investment inflow of N62.08 billion, which was a 74 percent decline from the N248.45 billion achieved in H1 2019. In the second half of the year, investments further dipped by 78 percent to N56.44 billion from N257.66 billion realised in the same period of 2019.

The drop in investments also affected the overall performance of the sector, especially as many manufacturing firms were forced to either suspend or shut down operations during the period under review, thereby reducing the number of players in the sector.

“At the moment and following the impact of COVID-19 on productivity, the sector is at the lowest and therefore requires deliberate action to rekindle significant productive activities” the report added.

Emanating from China, the world’s manufacturing powerhouse and Nigeria’s largest trading partner, especially for manufacturing inputs, the COVID-19 pandemic caused an abrupt stop in the supply of raw materials, goods, tools, and machinery for manufacturing companies which forced many of them to suspend business operations.

Furthermore, Brent crude oil which serves as the major provider of the country‘s FX experienced a historic fall during this period, reaching a two-decade low in April at $15.98 a barrel. This drop triggered the prevailing FX shortage and also caused the naira to be greatly devalued thereby impeding the procurement operations of local manufacturers.

Consequently, after two years of consecutive growth, the sector glided to a negative terrain in 2020 with -2.75 percent, which is also the worst experienced since 2016 when the Nigerian economy entered into recession according to the GDP data released by the National Bureau of Statistics (NBS). The sector’s contribution to GDP as well dropped to 8.99 percent in full-year 2020 as against the 11.64 percent it achieved in 2019.

Furthermore, with Nigeria ranking 131st out of 190 countries surveyed on the 2020 World Bank’s ease of doing business index, business experts assert that due to the recurrent challenges in Nigeria’s business environment and insecurity challenges, investors are forced to take flight for the proverbial greener path, scaring away prospective investors.

Experts, however, believe that investment inflow will improve in the medium to long term following the partial border reopening and the implementation of the African Continental Free Trade Area (AfCFTA)

“The reopening of the land borders should provide succor to the manufacturing sector even as the kick-off of AfCFTA serves as an avenue for manufacturers to penetrate new African markets and for investors to flood the market” Jide Babatope, Lagos-based analyst said.

Beyond the decline in investments, manufacturers suffered a decline in the volume of demand for causing an uptick in the inventory of unsold goods. This is also coming amid the surge in production and operations cost.

MAN revealed that the inventory of unsold manufactured goods in the sector increased by 44 percent to N577.61 billion in 2020 from N402.42 billion recorded in 2019.

In H1’2020, inventory of unsold goods stood at N275.39 billion and it increased significantly to N303.22 billion in the second half of the year.