The Manufacturers Association of Nigeria (MAN) has raised concerns about the significant impact of the recent fuel price hike on the country’s manufacturing sector. The increase in the price of Premium Motor Spirit (PMS) from N568 per liter to N855 is expected to exacerbate the rising cost challenges faced by businesses.
The MAN Director General, Segun Ajayi-Kadir, noted that the hike will lead to higher prices for other commodities, further straining the already dwindling disposable income of Nigerians. He acknowledged that the global increase in crude oil prices and Nigeria’s dependence on imported fuel made a price hike inevitable.
Ajayi-Kadir highlighted the negative consequences of the price hike on the manufacturing sector:
- Increased production costs: Higher fuel prices will lead to increased transportation and logistics costs for manufacturers.
- Reduced consumer demand: As Nigerians spend more on transportation and energy, they will have less to spend on non-essential goods, leading to decreased demand for manufactured products.
- Inflationary pressures: The hike will contribute to further inflation, putting additional strain on household budgets.
- Operational challenges: Manufacturers may need to scale down operations or even shut down due to increased costs.
Small and medium-sized enterprises (SMEs) are particularly vulnerable to the effects of the fuel price hike, as they often operate on tight margins. The increase in costs could force them to adjust their pricing strategies, potentially leading to reduced profit margins and decreased competitiveness.
The MAN urged the government to take measures to mitigate the impact of the fuel price hike on the manufacturing sector, such as providing targeted support to businesses and exploring alternative energy sources.
