Closure of P&G $300m Agbara plant mirrors challenges of manufacturers

The shut-down of Procter and Gamble’s (P&G) $300 million consumer goods plant in Agbara in July reflects the challenges faced by manufacturers in the outgoing year.

In 2014, P&G set up a diaper line in Agbara, Ogun State, tapped as the biggest US non-oil investment in Nigeria.

Four years down the line, the company packed up, citing restructuring of operations as its main reason.

“P&G is restructuring its Nigeria manufacturing operations to deliver a more effective business operation for now and sustainably for the future,” a statement signed by Lola Adenuga of the company’s communications department had said.

“This will entail an exit from production in its Agbara plant. We will strengthen our manufacturing operations in the Ibadan plant, scale up our contract manufacturing operations as well as continue to invest in our local talents,” the statement had added.

But those familiar with the matter told BusinessDay that the company had to shut down its Agbara plant due to high production cost incurred at the plant.

Agbara is notorious for its poor road network and multiplicity of taxes. This is however not peculiar to Agbara but is also a cog in the wheel of many industrial zones in the country.

Tax experts told BusinessDay that the number of taxes payable by businesses across the country is now 54 as against 37 in 2014.

Vivian Chigozie-Nmonwu, tax expert and lead partner at Vi-M Professional Solution, said these taxes need to be amalgamated into one or a few, since the whole tax cycle is a multiple chain of taxes on the same income stream.

Forty percent of manufacturing expenditure goes to alternative energy. Manufacturers have spent N212.85 billion on alternative energy sources between the second half of 2016 and the first half of 2018, according to data from the Manufacturers Association of Nigeria (MAN). This is over 100 percent higher than what was incurred in the previous four halves. Manufacturers told BusinessDay that logistics costs have risen by 50 to 100 percent in the last two years, owing to poor state of roads and lack of a good transport system.

Firms bringing in raw materials into Apapa ports and those exporting commodities abroad have seen their costs swell on rising dwell time, which results in high demurrage charges.

Only 10 percent of cargoes are cleared within the set timeline of 48 hours now while the majority of cargoes take between five and 14 days to clear, according to a maritime report conducted by the Lagos Chamber of Commerce and Industry (LCCI).The report notes that some cargoes take as many as 20 days to be cleared at the ports.