• Business
  • Updated: November 15, 2022

Manufacturers Worry As Shortage Of Raw Materials Hits Manufacturing Companies  

Manufacturers have lamented the difficult experience they face from the shortage of raw materials resulting from foreign exchange scarcity which is hurting production activities in the sector.

Manufacturers who spoke with Punch said it is a result of 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.

George Onafowokan, the Chief Executive Officer of Coleman Technical Industries, said the weakness of the naira, particularly in the parallel market where the vast majority of manufacturers source foreign exchange, had greatly disrupted production activities.

“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, and stop production because there was no way they could replace their stock."

According to him, manufacturers are dealing with the dictates of the black market, which is not healthy for the economy.

“Whether you’re buying raw materials or machinery, you’re still dependent on the black market, unfortunately,” he said.

Ike Ibeabuchi, a manufacturer of chemicals and Chief Executive Officer of MD Company Limited, 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.

Also speaking, Ifeanyi Okereke, the Chief Executive Officer of Kenfrancis Farms, Ifeanyi Okereke, said his company had shut down due to the foreign exchange crisis bedevilling the industrial sector.

"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 became a 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.

“It’s affecting us adversely. Prices of materials have gone up. Flour prices have increased.

"We don’t have the 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 N4000. There is also an increase in the price of baking ingredients.”

 The PBAN president further stated that the development had seriously eroded the profit margins of bakers who had to resort to survival measures to stay in business.

“We’re not making profits. Everybody is just surviving. We are not even talking about profitability now.

"We are looking for ways to produce, maintain quality and at the end of the day, be able to pay for materials and run overhead.

"Profitability is out of the question for now,” he added.

Also, Segun Kuti-George, the immediate past Chairman of the Nigerian Association of Small-Scale Industrialists, described the recent rebound of the naira as a welcome development.

“The appreciation of the naira is a welcome development. This is the kind of thing that will help businesses to grow as it would reduce the cost of importation because we import most of our materials.

"Seventy to 80 per cent of raw materials we use in Nigeria are imported.

"So, the price will come down and people will make more money and when they do, they will generate more profit and employment,” he said.


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Felicia Abisola  Olamiji
Felicia Abisola Olamiji

  A graduate of English Language from Olabisi Onabanjo University, passionate about learning new...

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