The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, clarified that President Tinubu’s administration was not to blame for the economic conditions that led to the closure of approximately 800 companies in Nigeria during 2023.
During a ministerial press briefing in Abuja on Tuesday, Edun explained that these companies did not leave Nigeria’s economic scene suddenly. Instead, factors such as market instability, unmet promises, and contract breaches forced their exit. He assured that the current administration is addressing these issues.
“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,” Edun said. “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.”
Edun emphasized that the new environment for investors is one where inflation is being tackled, which will eventually lead to lower interest rates. He also mentioned that investors can now benefit from Nigeria’s vibrant domestic market to add their own equities and invest.
In February, the Manufacturing Association of Nigeria (MAN) reported a troubling trend within its industry: approximately 767 manufacturing companies ceased operations in Nigeria in 2023.
Additionally, the association highlighted that another 335 companies faced severe financial distress that same year. MAN attributed this situation to several economic challenges, including exchange rate volatility, rising inflation, and a deteriorating investment climate.
“The manufacturing sector is already beset with multidimensional challenges. In year 2023, 335 manufacturing companies became distressed and 767 shut down,” a MAN spokesperson stated.
“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%.”
According to the Nigeria Bureau of Statistics (NBS), Nigeria’s GDP dropped to 2.9% in the first quarter of 2024, down from 3.46% in the fourth quarter of 2023. In the non-oil sector, GDP growth was 2.80% in real terms during Q1 2024, which was 0.02 percentage points higher than the same quarter in 2023 but 0.28 percentage points lower than in Q4 2023.
Key growth drivers in the first quarter of 2024 included the Financial and Insurance sectors (especially Financial Institutions), Information and Communication (particularly Telecommunications), Agriculture (notably Crop Production), Trade, and Manufacturing (specifically Food, Beverage, and Tobacco). These sectors contributed to positive GDP growth.
The non-oil sector, in real terms, contributed 93.62% to the nation’s GDP in Q1 2024, slightly lower than the 93.79% recorded in Q1 2023 and the 95.30% recorded in Q4 2023.
