Nigerian manufacturers are facing packaging crisis as firms grapple with high cost of flexible and non-flexible materials used in wrapping their products.
Manufacturers say the cost of finished packaging materials has risen by 50 to 150 percent in the last 18 months owing to dollar scarcity.
Importation of packaging materials is almost becoming impossible as foreign exchange scarcity means they cannot bring in the needed quantity.Local producers of packaging materials do not produce enough to serve medium enterprises and multinationals as they have been forced to cut down the volume of raw materials import due to foreign exchange crunch.
Noah Babatunde, the public relations manager of Nicapaco Limited, a producer of corrugated packaging materials, told BusinessDay that large enterprises such as brewers and tobacco companies no longer buy packaging materials as much as they did because of high prices caused by dollar shortage that has raised input costs.
“The problem is the cost of raw materials. Dollar exchange rate is high, so when we import inputs, prices of finished packaging materials become eventually very high. Most of these manufacturers are no more able to buy,” Babatunde said.
Two popular types of packaging are rigid and flexible packaging. Rigid packaging often has a relatively inflexible finite shape or form, while flexible packaging involves materials whose shapes can easily be changed or bent.
Most multinationals prefer flexible packaging because it is environmentally friendlier, sustainable, lightweight and cheaper.
Products are packaged with plastics, paper, glass, foam, and aluminium cans.
Okey Akpa, chairman, Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN), said packaging materials are now expensive for pharmaceutical firms because the Common External Tariff (CET) requires a manufacturer importing raw materials to pay five to 20 percent tariff, in addition to high dollar cost.
The CET is a regional agreement among the 15 ECOWAS countries. It places zero tariff on imported finished drugs but imposes between five and 20 percent duty on imported raw and packaging materials.
“The CET, as it is currently, spells doom for the local industry and could lead to low demand for locally made drugs,” Akpa said recently.
Like other manufacturers, energy crisis is also raising the production costs of many packagers in Nigeria as high gas price and power outages bite in industrial clusters.
Manufacturers spend more on diesel and fuel as power outages occur more than six times in a day in most industrial zones.
Manufacturers and exporters in Nigeria have been accused of not following global trends such as green and smart packaging, digital printing and sensory packaging, which are more attractive to shoppers and environmentally sustainable.
This accounts for mass rejections of some of the Nigerian products in Europe and the Americas.
In order to avoid the continued repeat of rejections on the back of poor product packaging, Nigerian exporters are making huge investments with a view to chainging this perception in the global market.
Tunde Oyelola, chairman of Manufacturers Association of Nigeria Export Promotion Group, lamented that in a bid to ensure Nigerian products are packaged in the best form, exporters have had to spend more on packaging.
“One of the things government can do is to assist exporters by providing packaging incentives,” Oyelola said.
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