Tinubu administration not responsible for closure of about 800 companies in 2023 – Wale Edun

The Minister of Finance and Coordinating Minister of Economy, Wale Edun, has claimed that President Tinubu’s government was not responsible for the economic conditions that led to the closure of about 800 businesses in 2023 in Nigeria.

Edun made this disclosure in a statement on Tuesday during the ministerial press conference in Abuja.

Edun explained that the exit of these companies from Nigeria’s economic landscape did not happen overnight; instead, factors such as market instability, broken promises, and contract breaches forced them to withdraw.

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 approximately 800 companies did not decide overnight. They stayed until they couldn’t stay any longer.

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“The conditions that made them pack up no longer exist. Those conditions were a foreign exchange market that was in no way suitable for businesses where there was no liquidity.

“They were the general economic regime marked by instability, unfulfilled promises, lack of compliance with contracts, etc.

“The new environment investors face is one where inflation is being attacked and ultimately leading to lower interest rates, where investors can use the very vibrant domestic market to add their own stocks and invest”. Edun said.

Background

In early February, the Manufacturers Association of Nigeria (MAN) reported a worrying trend within its industry, stating that around 767 manufacturing companies have closed their operations in Nigeria in 2023.

Additionally, the association noted that another 335 companies were in financial difficulty that 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 plagued by multidimensional challenges. In 2023, 335 manufacturing companies went into difficulties and 767 closed.

“Capacity utilization in the sector has decreased to 56%; the interest rate is effectively above 30%; Foreign exchange to import raw materials and unsold finished goods production machine inventory has increased to N350 billion and real growth has fallen to 2.4%.” the MAN spokesperson said in a statement.

What you should know

According to the Nigerian Bureau of Statistics (NBS), Nigeria records a drop in GDP to 2.9% in the first quarter of 2024, a lower rate than that recorded in the fourth quarter of 2023, which was 3.46%.

  • In the non-oil sector, GDP growth was 2.80% in real terms during the first quarter of 2024. This growth rate was 0.02 percentage points higher than that of the same quarter of 2023, but 0.28 points percentages lower than the fourth quarter of 2023.
  • Key factors in the first quarter of 2024 included finance and insurance (financial institutions), information and communications (telecommunications), agriculture (crop production), trade and manufacturing (food, beverages and tobacco), all of which contributed to growth positive GDP.
  • In real terms, the non-oil sector contributed 93.62% to the country’s GDP in the first quarter of 2024, slightly lower than the 93.79% recorded in the first quarter of 2023 and the 95.30% recorded in the fourth quarter of 2023.