The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has stated that the government of President Tinubu was not responsible for the economic conditions that led to the shutdown of about 800 companies in 2023 in Nigeria.
Edun made this disclosure in a statement on Tuesday during the ministerial press briefing in Abuja.
Edun explained that the departure of these companies from Nigeria’s economic landscape did not happen overnight; instead, factors like market instability, unfulfilled promises, and breaches of contract forced them out.
He added that these issues are currently being addressed by the current administration.
“Our government inherits the assets and liabilities of the previous administration. The 800 companies or so did not make up their minds overnight. They stayed until they could stay no more.
“The conditions which send them packing are no more. Those conditions were a foreign exchange market that was in no way fit for business where there was no liquidity.
“They were the general economic regime marked by instability, broken promises, lack of adherence to contract and so on.
“The new environment which investors face is one in which inflation is being attacked and eventually lead to lower interest rates where investors can use the very vibrant domestic market to add their own equities and invest,” Edun said.
Backstory
Earlier in February, the Manufacturing Association of Nigeria (MAN) reported a concerning trend within its industry, indicating that about 767 manufacturing companies shut down operations in Nigeria in 2023.
In addition, the association noted that another 335 companies were in distress financially in the same year.
According to MAN, this development is attributed to various economic difficulties, including exchange rate volatility, rising inflation, and a general worsening of the investment climate.
“The manufacturing sector is already beset with multidimensional challenges. In year 2023, 335 manufacturing companies became distressed and 767 shut down.
“The capacity utilization in the sector has declined to 56%; interest rate is effectively above 30%; foreign exchange to import raw materials and production machine inventory of unsold finished products has increased to N350 billion and the real growth has dropped to 2.4%,” the spokesperson for MAN said in a statement.
What you should know
According to the Nigeria Bureau of Statistics (NBS), Nigeria records a drop in GDP to 2.9% in the first quarter of 2024, lower than the rate recorded in the fourth quarter of 2023 which was 3.46%.
- In the non-oil sector, the GDP growth was 2.80% in real terms during Q1 2024. This growth rate was 0.02 percentage points higher than the same quarter in 2023, but 0.28 percentage points lower than Q4 2023.
- Key drivers in the first quarter of 2024 included Financial and Insurance (Financial Institutions), Information and Communication (Telecommunications), Agriculture (Crop Production), Trade, and Manufacturing (Food, Beverage, and Tobacco), all contributing to positive GDP growth.
- In real terms, the non-oil sector contributed 93.62% to the nation’s GDP in Q1 2024, which was slightly lower than the 93.79% recorded in Q1 2023 and the 95.30% recorded in Q4 2023.
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