Findings have revealed that more than 50 Nigerian manufacturing companies have shut down in the last five years due to forex and power supply crisis in Nigeria.
Already, some manufacturing companies that have exited the industry in the last five years include Surest Foam Limited; Mufex; Framan Industries; MZM Continental; Nipol Industries; Moak Industries; and Stone Industries. Others are Solo Industries; Quick Born Industries; Supercor Industries; Arabi Industries and Rola Industries.
The Chairman, Board of Directors, Manufacturers Power Development Company, Ibrahim Usman, noted that the high cost of power supply puts manufacturers at a disadvantage point, saying “In some countries, power takes only about 10 per cent of their production cost. In Nigeria, power, sometimes, takes up to 50 per cent of our production cost. So, how can we be competitive? There is no way our goods can be competitive. The African Continental Free Trade, which is coming up, is a very big challenge for Nigeria. Our goods cannot be competitive when electricity alone can take up to 40 per cent of your production cost. It is a very big challenge.
The foreign exchange crisis combined with high energy costs threatened Nigeria’s manufacturing sector. A dollar exchanges at over N710 at the parallel market and more than N440 at the official window. More than 50 manufacturers have exited the Nigerian market due to the forex crisis.
Today, local manufacturers struggle to access the foreign exchange needed to import raw materials, spare parts and machinery. Most of them look up to deposit money banks, where a dollar sells for around N440, but the banks themselves do not have sufficient dollars to meet their needs.
In an interview, the Chairman of MAN Gas Group, Dr Michael Adebayo, said “There is no foreign exchange anywhere. If you request $100,000, they will give you only $1000, and this may take you 90 days.
According to him, “Banks would break the amount requested into pieces for months for the manufacturers due to lack of forex.”
Already, manufacturers have resorted to the parallel market, where a dollar goes for as high as over N700, but this has had a severe impact on their production costs and the country’s inflationary trend.
The Chief Executive Officer of Moak Enterprises, a bottled water company that shut down in 2021, Olatunde Akintunde, revealed that the high cost of raw materials made his company fold up, berating the current regime for poor management of the foreign exchange market. “I have not seen this kind of economic management in my life. Things were better before the administration came on board, which was why I started this business in 2014. But it is very difficult to understand what is going on now.”
