Manufacturers seek end to forex scarcity

The Manufacturers Association of Nigeria Ogun branch has called on the Federal Government to take urgent and concerted action to resolve the ongoing foreign exchange scarcity and the surge in dollar prices.

The Chairman, MAN Ogun, Mr George Onafowokan, made the call at the 39th MAN’s Annual General Meeting on Tuesday in Abeokuta.

The News Agency of Nigeria reports that the network has its theme: “Dollar to Naira Cost: The Nigerian Manufacturers Daily Dilemma: Exploring Strategies for Business Sustainability”.

Onafowokan said the foreign exchange scarcity and hike in dollar rate greatly hindered manufacturing sector operations, hence affecting business sustainability.

The chairman, also Managing Director, Coleman Wires and Cables Industries Ltd., highlighted how the foreign exchange crisis had severely hampered the production capabilities of Nigerian manufacturers.

According to him, its unavailability is a pressing issue for the industry and has forced many manufacturers to resort to the parallel market with high exchange rate figures.

“The situation is worsened following the government’s decision to float the Naira in 2023, pushing the rate to an alarming N1,900 to a dollar by February.

“These fluctuations have significantly contributed to Nigeria’s inflation rate, which soared to 28.92 per cent by December 2023.

“The manufacturing sector endured heavy losses, with about 16 major companies collectively losing N792 billion to naira’s depreciation,” he said.

Onafowokan also pointed out that the lack of access to affordable foreign exchange for importing essential raw materials and machinery had led to a decline in capacity utilisation within the manufacturing sector.

He revealed that manufacturers were contending with an unsold product inventory valued at N350 billion, while the sector’s growth rate plummeted to 2.4 per cent.

He stated that apart from the foreign exchange challenges, poor infrastructure and high energy costs were also major obstacles affecting the manufacturing sector.

“The state of many roads within Ogun State had led to increased logistics costs and, in some cases, derailed operations due to road accidents, hence they require urgent upgrades.

“Furthermore, the high price of energy and a significant increase in electricity tariffs by the Nigerian Electricity Regulatory Commission adds to manufacturers’ burden.

“We, however, commend the Ogun State Government for its ongoing infrastructure projects and urge faster completion of key road ventures to support the industrial sector,” he said.

Onafowakan mapped out several recommendations to mitigate the challenges facing manufacturers in Ogun.

According to him, they include the need for the state government to streamline taxation systems, enhance road conditions, and promote a “Buy Made-in-Nigeria” policy that encourages local procurement.

He lauded members of the Ogun State branch of MAN for their dedication and urged collaborative efforts to navigate the current economic landscape and foster business stability.

Also speaking, the Governor, Ogun State, Dapo Abiodun, restated his dedication to creating an enabling environment for manufacturers to make their businesses thrive.

Abiodun, represented by the state’s Commissioner for Industry, Trade, and Investment, Mr Adebola Sofola, acknowledged the challenges faced by manufacturers.

He reaffirmed the state’s commitment to addressing infrastructure and power issues, saying providing solutions was crucial to the growth and sustainability of businesses in Ogun.

“We recognise the struggles manufacturers face.

“Our policies are designed to create an environment where businesses can thrive and attract foreign investors.

“We are committed to improving infrastructure and tackling power challenges, even though some fiscal policies remain outside our control,” he said.

Also, the Managing Director, Skytone Finance Company Ltd, Mr Ola Olabinjo, provided strategic financial solutions for manufacturers.

Olabinjo suggested measures such as cash flow management, short-term credit options, and currency hedging would help mitigate currency fluctuation risks.

He emphasised local sourcing as a critical step toward reducing import dependency and exposure to foreign exchange volatility.

MAN president, Francis Meshioye, also highlighted the significant challenges manufacturers faced due to current monetary policy conditions.

According to him, they include exchange rate pressures and the high costs of diesel and raw materials.

He urged the state government to domesticate the Presidential Executive Order 003, which mandates local patronage by government agencies to boost demand for Nigerian-made goods.

Meshioye also called for enhanced infrastructure, especially the rehabilitation of federal roads within Ogun State, such as the Atan-Igbesa-Agbara road, to support efficient movement of goods.

He also underscored the importance of developing the Ota, Agbara, and OPIC industrial estates and encouraged leveraging the amended Electricity Act to provide affordable and reliable power supply to the industrial zones.

Meshioye, therefore, called on the government to harmonise taxes and levies to ease the financial burden on businesses.

According to him, a collaborative approach between manufacturers and government at all levels was critical to overcoming challenges and fostering economic growth.

(NAN)