CBN’s policy forces flour millers out of business in Kano

The cost of bread in the Northern parts of Nigeria is now on the upward side, as the recent policy of the Central Bank of Nigeria (CBN) to exclude some goods from the list of items valid for foreign exchange, has forced many companies producing wheat flour in Kano, to shut down.

One of the affected companies is the Northern Nigeria Flour Mills plc, which has of recent shut down its wheat processing plant in the city.

The move to shut down the plant was as a result of growing difficulties. The company now faces difficulty in importing wheat- the core ingredients used for its operation because of the new CBN `s policy.

The company, like many other ones producing wheat flour in the country, depends on imported Wheat from United States of America, and other European countries, for their operations.

Subsequently, the company which is the biggest, as well as the oldest flour manufacturing concern in Northern Nigeria, has off-loaded over 100 workers operating the plant into the already over saturated Nigerian labour market.

BusinessDay authoritatively confirmed this development during a fact-finding visit to the Flour Mill’s manufacturing plant, which is situated on Maimalari Road, in Bompai Industrial Estate in Kano.

Some of the workers affected by the sack, said, the wheat processing plant of the company was shut down in the beginning of the year, at the moment only a few of them operating the maize processing window of the over 50 years old plant are still engaged, all others have been disengaged.

Also, confirming the development, Suleiman Umar Tofa, chairman, Bompai branch of the Manufacturers Association of Nigeria (MAN), disclosed that the company, was one of the others who depended on imported raw wheat for their operations in Kano, that have shut down their operations.

According to Tofa, “as it is today, no company in the Northern part of the country produces wheat flour, the flour being consumed in the region are now coming from companies still managing to remain in operation in Lagos-Ota manufacturing axis of the country.”

He noted that one of the implications of the policy shift on forex embarked upon CBN was the on-going shut down of manufacturing plants, and the resultant mass layoff of workers.

The other implication was the upward movement in the price of wheat flour, which is used for the baking of bread and other confectionaries by Bakers, across the country, Tofa said.

“Yes, the Bompai branch of MAN is aware of the shutting down of some manufacturing plants involved in the production of household commodities like, Flour, among others.

“The reason for this development we were told, was because the companies operating the plants can no longer access the Nigerian Foreign Exchange Market to access forex buy their raw-materials which is wheat as a result of the new CBN `s policy.

“While, our association appreciated the circumstances that prompted the CBN `s decision, which has to do with the nation `s declining earning from the sale of oil, we however, believed that the implementation of the policy should have been a gradual one, in view of its socio-economic implications.

“Some of the glaring effects of the policy are what we are now experiencing which are: closure of factories, and its attendant job losses, and a nation that is in dare need of jobs. I do not believe this is good enough,” he stated.

It would be recalled that CBN in the beginning of the year, in response to the growing demand for foreign currencies, particularly, America`s dollars, put in the mechanism for curtailing the trend.

One of the measures taken by the CBN was the exclusion of 40 items that can be grown or manufactured in the country from the list of items valid for forex in the Nigerian Foreign Exchange Market.

What this implies was that those who import these items can no longer buy foreign currency from the official window to pay overseas suppliers; instead, they have to source from the parallel market or Bureau De Change to pay for their imports.