Nigeria’s manufacturing sector is reeling from the impact of the country’s harsh economic conditions, leading to the shutdown of over 50 companies in the chemical and non-metallic products sub-sector. This crisis has resulted in the loss of more than 100,000 jobs, with many more at risk as other firms struggle to stay afloat.

The affected companies include a mix of multinationals, medium-sized enterprises, and small-scale businesses, all of which are members of the Chemical and Non-Metallic Products Employers Federation (CANMPEF). At its peak, CANMPEF boasted a membership of over 100 firms, employing around 350,000 people across Nigeria. However, the current situation is dire, with 50 companies already shut down, four more on the brink of closure, and 80% of the remaining companies operating at low capacity.

Among the high-profile casualties are industry giants like Glaxo SmithKline Beecham, Procter & Gamble, and Femina Hygienical Products Nig. Limited. Other notable firms on the verge of shutting down include Unilever, PZ Industries, and Kimberly-Clark, which has cited high energy costs, expensive raw materials, and declining consumer demand as key challenges.

Manufacturers Lament Government Policies

The collapse of these companies has been attributed to a series of unfavorable government policies, according to the Executive Secretary of CANMPEF, Olorunfemi Oke. He highlighted issues such as the floating of the naira, volatile exchange rates, fuel subsidy removal, high import duties, and soaring interest rates as major contributors to the crisis. The situation has been further exacerbated by the erratic power supply, increased electricity tariffs, and the high cost of diesel, all of which have made it nearly impossible for businesses to remain viable.

Oke expressed deep concern over the impact of these challenges on the manufacturing sector. “The effects of the socio-economic challenges on the manufacturing companies are enormous. Most of our member companies are just managing to survive,” he said. He also pointed out that the inability to access foreign exchange for purchasing raw materials and machinery has been particularly damaging, leading to high production costs and reduced profitability.

The crisis has not only affected large corporations but has also had a devastating impact on smaller businesses. Linda Manufacturing Company, a producer of synthetic hair attachments, has shut down, leaving many young women unemployed. Kimberly-Clark, known for its Huggies diapers and sanitary pads, is also on the brink of closure, just two years after investing $100 million in a new factory in Ikorodu, Lagos State.

Calls for Government Intervention

Industry leaders are calling on the government to take immediate action to address the challenges facing the manufacturing sector. They have urged the government to provide concessions on forex allocation, reduce import duties for essential raw materials, improve the supply of energy and gas, and lower the rates charged by power distribution companies. Additionally, they are advocating for a reduction in multiple taxes imposed by local, state, and federal agencies, as well as the rehabilitation of critical infrastructure such as roads.

The Managing Director of Voda Paints Limited, Rotimi Aluko, echoed these sentiments, emphasizing the need for the government to view manufacturing as a strategic asset. “If manufacturing is taken as the most strategic value-adding local content economic weapon that it is, Nigeria will transform into the league of leading nations of the world,” he said. Aluko also highlighted the importance of protecting local industries and creating an enabling environment for businesses to thrive.

The situation is dire, with many companies operating in “survival mode,” cutting costs, reducing operations, and laying off employees. The National Union of Chemical Footwear Rubber Leather and Non-Metallic Products Employees (NUCFRLANMPE) has also pleaded with the government to intervene, warning that the continued collapse of the manufacturing sector could lead to even greater economic and social instability.

The urgent call for government intervention reflects the gravity of the situation, with the future of Nigeria’s manufacturing sector hanging in the balance. Without swift and decisive action, the country risks losing even more companies, jobs, and economic opportunities.

Source: Vanguard