Manufacturers are facing severe raw materials shortages resulting from foreign exchange scarcity which is hurting production activities in the sector.
Manufacturers who spoke with The PUNCH lamented the difficulty in accessing foreign exchange at the parallel market due to the clampdown on activities of bureau de change operators, noting that many of them could go out of business. According to the Chief Executive Officer of Coleman Technical Industries, George Onafowokan, the weakness of Naira, particularly at the parallel market where the vast majority of manufacturers source foreign exchange, had greatly disrupted production activities.
Onafowokan further expressed optimism that the price hikes, which followed Naira’s dramatic slide, would fizzle out if the currency maintained its current momentum.
He said, “The volatility of the 36 per cent increase in one week or so was not to anybody’s benefit. It distorted the markets. Manufacturers kept repositioning, and eventually the whole manufacturing sector almost went into comatose. Some companies had to stop selling, stop production, because there was no way they could replace their stock. He said manufacturers were dealing with the dictates of the black market, which was not healthy for the economy. Whether you are buying raw materials or machinery, you are still dependent on the black market, unfortunately,” he said.
A manufacturer of chemicals and Chief Executive Officer of MD Company Limited, Ike Ibeabuchi, said he was experiencing severe raw materials shortages owing to the forex scarcity. “My raw materials were depleted two months ago, but I have not been able to replenish them because I cannot find Dollars. Also, the Dollar rate is also making it almost impossible for many of us to continue in the manufacturing business,” he said.
The Chief Executive Officer of Kenfrancis Farms, Ifeanyi Okereke, told The Punch that his company had shut down due to the foreign exchange crisis bedevilling the industrial sector.
He said,” We started in 2016, believing in Nigeria and hoping that we could process agro products and exports. But getting raw materials to carry out this objective becamea problem. Our cost of production skyrocketed and, at a point, it became clearly impossible to continue operations. We suffered severe shortages before we closed down,” he said.
The President of the Premium BreadMakers Association of Nigeria, Emmanuel Onuora, said the bakers were still hard hit by the Dollar crunch, triggering significant increases in the prices of baking materials.
Onuorah said, “It is affecting us adversely. Prices of materials have gone up. Flour prices have increased. We do not have in-country capacity to produce the raw materials we use. The price of flour just went up by about N2,300. The prices of calcium and preservatives have gone up by N4,000. There is also an increase in the price of baking ingredients.”