Way out of the collapse of food and beverage companies in Nigeria

Each time one passes through the once vibrant Ikeja industrial hub at the Oba Akran axis, Lagos state and sees the dilapidated structures, or with some converted into worship centres it portrays a heart-rending spectacle. Notable amongst this is the once productive Cocoa Industries Limited, CIL. It is long gone! And so are several other manufacturing companies not only located in Lagos but across the country, especially in Ota and Agbara in Ogun state, Jos in Plateau state, as well as other hubs that employed hundreds of thousands of Nigerians in places such as Bauchi, Kano and Nnewi in Anambra state.

In fact, it paints the parlous picture of the painful paradox of the combined economic and political failure in a land God has abundantly blessed with vast, natural resources. So, one is saddened by the news headlines that “109 Nigerian companies delisted between 2002 and August 2019.” That includes the once popular Swiss-owned company,UTC Nigeria Plc. But one’s source of sincere concern is that the economic situation has worsened over the recent years. For instance, in May 2022 another news headline literally screamed that: ” Over 50 companies shut down over forex, power crisis”. Also, in October 2023 the news item was focused on that of:” Seven companies that shut down over worsening economy in 10 years”.

Furthermore, in March 2024 it was that of: ” Factory shutdowns -signs of harsh economic reality”. Of course, they are, if only our political leaders would eat the humble pie and admit that the bitter truth indeed, is that they have not walked the talk on rejuvenating the near comatose productive environment.

It has therefore, become expedient to identify the factors responsible for the collapse of the several companies including that of the food and beverages factories and more importantly, highlight the sustainable solutions to the economic quagmire. Some of the companies that collapsed within the ten year period include Mayor Biscuits company(MABISCO), Ogun state in October 2023. It was established in 2016. Another was Louis Carter Industry, established in 1989 in Nnewi, Anambra state and Moak Enterprises that used to produce both bottled and sachet ‘Meridan Waters’ in Ogun state but shut down in 2021. Deli Foods was yet another.

Listed amongst the factors responsible for their collapse are lingering foreign exchange scarcity, poor electric power supply, and multiple taxation. Others include poor and decrepit infrastructure, as evident in pot hole- riddled roads and epileptic electric power supply, high energy costs, insecurity and “sluggish demand” for their products due to the low purchasing power of the average consumer. Over the decades however, other reasons traceable to the shutting down of the companies include policy flip – flops on the part of the government, difficult operating environment, poor management and limited access to funding. Cumulatively, these frictional factors hampered the growth and sustainable processes of the companies.

This is a worrisome economic situation because of the high number of active young Nigerians thrown back into the crowded labour market. That of course, fuels the volatile insecurity challenge bedeviling the country. We must all therefore, admit that some urgent but people- oriented policies have to be put firmly in place to provide a paradigm shift from that of flimsy excuses, passing the ball in the ping – pong blame – game to that of declaration of a state of emergency to fashion the best way forward. It begins with Public Private Partnerships ( PPP).

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This is a worrisome economic situation because of the high cost of production. For instance, the report that 10 Nigerian companies paid a staggering sum of N187.9 billion as taxes in the first half of 2019 while as many as 45 banks collapsed between 1994 and 2006 cannot encourage productivity. Also, the high number of active young Nigerians thrown back into the crowded labour market is a dangerous dimension to the issue of the collapse of companies.That of course, fuels the volatile insecurity challenge bedeviling the country. We must all therefore, admit that some urgent but people- oriented policies have to be put firmly in place to provide a paradigm shift from that of flimsy excuses, passing the ball in the ping – pong blame – game to that of declaration of a state of emergency to fashion the best way forward. It begins with Public Private Partnerships ( PPP).

Through such collaborations, it would be important to articulate am economic development which should always put the horse ahead of the carte. The enabling environment of steady supply of electricity, construction of good access roads, provision of access to funds including forex and streamlining the tax regime to do away with multiple taxes have become imperative. We must be concerned that over 50 multinational corporations have exited the country between 2015 and 2024. The enabling environment has to be in place before anyone goes to other countries for Foreign Direct Investment (FDI). In addition, is that of instituting economic policies that would act as catalysts to boost local production of foods and beverages, small and medium scale enterprises as well as that of local machine production.

The noble and patriotic aim is to increase our potential to have more than enough of the products we currently import, while the raw materials are right here within our reach. All we need to do is apply modern technology across the food value chain, from production through processing, preservation, packaging, marketing and export. Doing so would boost our GDP and the Human Development Index, HDI. But all these will only make sense under a safe and secure environment. Yes, we can. And now is the best of times to kick-start these policies, devoid of socio -political sentiments, all in the national interest.
This is a worrisome economic situation because of the high cost of production. For instance, the report that 10 Nigerian companies paid a staggering sum of N187.9 billion as taxes in the first half of 2019 while as many as 45 banks collapsed between 1994 and 2006 cannot encourage productivity. Also, the high number of active young Nigerians thrown back into the crowded labour market is a dangerous dimension to the issue of the collapse of companies.That of course, fuels the volatile insecurity challenge bedeviling the country. We must all therefore, admit that some urgent but people- oriented policies have to be put firmly in place to provide a paradigm shift from that of flimsy excuses, passing the ball in the ping – pong blame – game to that of declaration of a state of emergency to fashion the best way forward. It begins with Public Private Partnerships ( PPP).