The Manufacturers Association of Nigeria (MAN) is lamenting over the country’s tough operating environment as its members continue to shut down operations or relocate to other neighbouring countries, which is constraining the sector’s growth.
This was affirmed by executives of the association at the 2022 CEOs breakfast meeting of MAN, Ikeja branch held on Tuesday as they said that the country’s operating environment is characterized by overregulation, high production cost, FX shortage, unfriendly policies, infrastructure deficit, among other issues.
“Currently some manufacturers are halting operations temporarily for months but as things are going now, some will extend for a year or more, those whose raw material sourcing is 100 percent importation will be forced to shut down,” Mansur Ahmed, president of MAN told BusinessDay.
Mansur who was represented by John Aluya, vice president, MAN, Lagos Zone said manufacturers in the country suffer a lot of problems in a bid to operate as they pay so much to generate energy and are expected to fulfill other financial obligations like paying taxes and employees, yet they cannot access raw materials for production.
“The biggest challenge we face is a complete absence of infrastructure which is necessary, the cost of diesel has skyrocketed to N1,100 per litre in some parts of the country, A dollar as at today is N625 how can manufacturers survive that?” he said.
The president also said manufacturers are not benefitting from the current FX policy, as the government lumps up those who import finished goods and those who import raw materials into one category so everyone struggles to get FX and it is not even available.
“It is challenging but we are determined to weather the storm, all we ask for is corporation and understanding from the government so that we can continue to manufacture, some policies need to be reviewed to enable manufacturers to improve production and operations,” he said.
The president revealed that in a bid to help its members and improve activities in the sector the association has expanded its advocacy groups to enhance engagements between the governments that create policies and the government agencies that implement the policies.
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Robert Ugbaja, chairman, MAN, Ikeja branch said in other climes businesses are provided with a better operating environment and can function effectively but here manufacturers have to keep the system running by themselves providing energy at a high cost.
“For the manufacturers to leave their specialization of producing goods to start generating power is an anomaly and this is an extra cost that will have been used to develop the manufacturing process, this is why a lot of our members have either closed down or are relocating to other places,” he said.
Ugabja added that manufacturers are pressured as they are unable to pass costs to the consumers who are suffering declining purchasing power and prioritize affordability which threatens product demand, competitiveness, and profitability.
He said for manufacturers to retain investments and improve operations they need incentives that will encourage them such as friendly policies, constant electricity, and enhanced collaboration from the government.
Speaking on the theme; sustainable manufacturing in Nigeria; defining the operating environment of the business, Bernard Orji, partner at Deloitte Nigeria highlighted some limitations to sustainable manufacturing in the country.
“Nigeria’s manufacturing sector suffers a weak business environment, weak regulatory and compliance monitoring, there is need to engage stakeholders that will help build and implement sustainable manufacturing,” he said.
