By Melvin Onwubuke
The Manufacturers Association of Nigeria has said that many factories may shutdown operations amidst the lingering foreign exchange crises.
This follows the statement of the Director General, Mr Segun Ajayi-Kabir in a recent interview on AIT.
He disclosed that manufacturers could not access up to 20 per cent of their forex needs at the official market. Thus, marketers are left at the mercy of the black market.
Ajayi said, manufacturers have continued to struggle with high cost of production which as not allowed them to produce optimally.
He said “There are reports that across the board, many warehouses and plants of many manufacturing firms are stockpiled with unsold goods manufactured last year.
“The development is as a result of the devastating effects of the exchange rate crisis, inflation, fake and sub-standard goods, smuggling and other macro-economic challenges.”
He continued that, manufacturers may be left with no choice but to either cut down on its workforce or stop production totally, if there is no improvement in sales record.
“These had put many manufacturers in a great dilemma in the current year as they are applying brakes on production by watching keenly events in the country to know if there would be an improvement in sales in order to create space for fresh production for the year,” he added.
He noted “The continued naira depreciation against the dollar and the general forex volatility are forcing manufacturers to have a rethink. No genuine manufacturer could operate successfully and make a profit under the current scenario, whereby the naira has been falling sharply more than expected in the country.”
Ajayi urged the CBN to discard the Price Verification Portal introduced last year citing, it has caused the close of many companies as a result of inability to import raw materials.
He pointed out “The government should also open new windows for us to source our credit at rates that are not lower and that are not higher than five per cent. These are very quick wins that the government can do, that can lower the pressure that is upon the manufacturing sector.”
Ajayi disclosed that some members of the association who had paid for forex at the futures market have already been asked to provide their bank details for a refund due to the unavailability of forex.
