BusinessDay

Manufacturers worry about losses as Omicron spreads rapidly

Manufacturers in Nigeria fear the worst as the new COVID-19 variant spreads rapidly with threats to repeat adverse impact on businesses and production activities.

Some manufacturers who spoke with BusinessDay said that the variant classified as a SARS-CoV-2 “variant of concern,” by the World Health Organization (WHO) may not be easily controlled, especially as information about its transmissibility, severity and ability to evade vaccines is unascertained.

“If this is not promptly curtailed, heads will roll in the sector as manufacturers are yet to fully recover and our plan to become active participants in the African Continental Free Trade Area (AfCFTA) will become a fantasy,” Hamma Kwajaffa, director-general, Nigerian Textile Employers Association (NTEA) said.

Kwajafar added that since the outbreak of the pandemic almost a year ago, some parts of China are yet to grant access to their country, thereby hindering production activity especially in Nigeria who rely on China for ample input sourcing.

Economic experts believe that businesses will enjoy a small seasonal boost in December owing to the festive season as demand for products and services increase significantly in line with annual trends.

Manufacturers are already taking strategic positions to effectively utilize the festive season as a quick relief for slow business activities in the course of the year.

Another manufacturer who pleaded anonymity expressed concerns as the new variant may disrupt festive season trends for manufacturers.

“It is coming at a crucial time such as this festive period when production activities should ramp up and demand for products should skyrocket, countries have started restricting entry, what happens if a lockdown occurs,” he added.

Read also:High production costs could deny Nigerian manufacturers AfCFTA benefits- MAN

Manufacturers in Nigeria are still struggling with the aftermath of the COVID-19 pandemic part of which is the cut in supply of raw materials, low demand of products particularly those categorized as being non-essential, hike in production cost, etc.

Manufacturers’ production and distribution costs increased by 21 percent in the second quarter of 2021, the hike in production cost also caused a 29 percent decline in the volume of production, according to the MAN CEOs Confidence Index (MCCI) for the second quarter of 2021 compiled by Manufacturers Association of Nigeria (MAN).

Thirty-five percent of the survey respondents said that the pandemic caused the volume of sales to decrease while another 62 percent claimed that it caused a spike in the shipping cost.

“Since the onset of COVID-19 pandemic in the early quarter of 2020, the severity of forex challenge has intensified, particularly as the value of the Naira deteriorated. Unfortunately, even with a gradual return to normalcy of business activities and the increased recovery of forex earnings as crude oil prices improved, acute shortage of forex persisted,” it stated.

Jide Babatope, a Lagos based economic analyst said prior to 2020, the manufacturing sector was already struggling with FX scarcity, weak consumer demand, escalated cost of production, among other issues which was intensified by the pandemic.

“In the event of another COVID-19 disruption, the challenges will be intensified and the impact will be more profound on manufacturing SMEs,” Babatope said.

The Omicron variant was first identified in South Africa on the 25th of November and has now been identified in 22 countries with Nigeria and Brazil among the latest.

The new variant is fast making an impact on the world as countries, organizations and individuals try to curb its spread taking a cue from the COVID-19 virus outbreak.

Already, the African Development Bank (AfDB) has postponed its 2021 Africa Investment Forum until further notice over rising global travel restrictions due to the COVID-19 Omicron variant.

Furthermore, Japan, Australia, the United States, Bahrain, Saudi Arabia and Canada have moved to block flights from African countries following the discovery of the Omicron variant, echoing previous emergency responses that triggered a global freeze on travel.

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