Chairman of the Manufacturers Association of Nigeria (MAN), Apapa Branch, Raphael Danilola, has expressed worry over the fate of existing industries, saying that if the problems of FX scarcity, raging insecurity and the harsh operating environment are not addressed immediately, more businesses will close soon.
Speaking in Lagos, he said trading volumes have steadily declined, causing the naira to slump to a record low against the dollar this year, with a 37 per cent premium on the unofficial exchange rate.
The sustained FX shortage, he said, has inflicted more pain on manufacturers and stunted the growth of the sector.He added that the crisis is further exacerbated by the fact that most manufacturing companies rely on imported raw materials for production needs and this scarcity has forced them to scale down on capacity utilisation. Most of the interventions to arrest the weakening naira on the parallel market have not helped but only worsened the situation, adding that they won’t work until local challenges are addressed.
Decrying the raging insecurity in the country, he said they have lost several markets because they cannot access those places for security reasons.
“Investors now see our location as too risky to invest in. While struggling with the high cost of production input, huge sums must be allocated for the security of our investment and immediate environment. Our members who rely on agricultural products for input are most affected due to insecurity in many farming areas. Food inflation is at its peak as food prices keep going up as a result of increased insecurity in the North,” he said.
He said the manufacturing sector has suffered huge losses due to insecurity on locally sourced raw materials, increased cost of logistics and drop in demand for finished goods.
He also noted that rising inflation, escalated energy process, FX instability and unstable customs duty rates coupled with other existing challenges, have all combined to affect the manufacturing operating environment negatively.
He continued: “Power supply has remained a major challenge for manufacturers, forcing them to rely on alternative energy which comes at its own huge cost and erodes profit margin. Currently, manufacturers daily lament the deteriorating operating environment in Lagos due to poor infrastructure, multiple taxations, policy inconsistencies, FX scarcity, unfavourable port tariffs, discouraging actions of public servants who interface with businesses, palpable insecurity, dearth of useful incentives for businesses and increased activities of non-state actors.”
He said the overbearing approach of most government agencies which are not interested in the survival of industries but only interested in revenue collection is appalling.
“It is sad to note that many manufacturing companies are folding up while several others are relocating to other states with better operating environments. The government needs not only to develop but also implement deliberate policies to improve the ease of doing business in Lagos. This would not only stem this ugly trend but would attract new investment into the Apapa industrial clusters,” he said.
He pleaded with the government to rehabilitate roads and drainages within the industrial areas and get rid of street urchins in Lagos State, describing their presence as a big threat to businesses.
“I am begging the Lagos state government to curb the activities of agberos who contribute nothing but forcefully extort manufacturers daily. We are also pleading for the harmonisation of multiple taxes to reduce the burden on manufacturers,” he urged.
