In this interview with EHIME ALEX, the President, Association of Micro Enterprises of Nigeria, Saviour Iche, speaks on the market environment for local manufacturers
How is local manufacturing faring since the outbreak of Coronavirus Disease?
Generally, for the local manufacturers, business has not been easy. The Nigerian government, in its wisdom, proposed billions of naira as palliatives to Small and Medium-sized Enterprises. However, the monies are only available on the pages of newspapers and television screens. As a president of an association, if I had applied more than once and got nothing, what would you say of my members? As it is now, we need money to sustain our businesses.
Business has been stagnant. The reasons are that the economy is not favourable for small and average business owners and prices of raw materials have more than doubled. One hundred bags of plastic we used to buy for N680,000 now sells for almost N1.3m. If you have N2m to do business now, automatically what you have is like N800,000 going by the present economic reality. The governments are paying no attention to all of these. Not long ago, I called my human resource personnel and told him to retrench some of my staff because of the way things are going. Companies are folding up. This is a sector the governments should not joke with because it has the larger employees than big manufacturing companies, which have machines that could do the work of 30 persons.
How do local manufacturers source raw materials for production?
We source raw materials locally. There are companies that deal on the raw materials we used. However, we are getting the materials now at higher prices. One of the reasons is the 7.5 per cent increase in the Value-Added Tax.
In what ways has the Central Bank of Nigeria’s ban on some imported items and the re-opening of the border aided the market for local manufacturers?
The closing of the border by the Nigerian government was a mistake. The person who came up with the idea should have been cooling off his or her head at the Ikoyi prison. The decision shouldn’t have been taken in the first place; stakeholders were not even carried along. Although the border has been reopened, the damage has already been done. The losses recorded, while it lasted, will take a while to be recovered. For instance, most countries and companies outside the country depend on Nigerian local manufacturers for their products. But during the period of the border closure, a lot of companies folded up when their capacities to pay staff salaries and cover other overhead costs waned.
Nigeria consumes about 30 per cent of what it produced, while about 70 per cent goes to the neighbouring countries. During that period of border closure, the 70 per cent could not go out. Even now, consumption rate is still suffering as most of the neighbouring countries have developed the technical knowhow and started producing most of our local products and no longer buy from us. I can recall one of my customers in Ghana, who always bought goods worth over N6m from me every two months, now the customer has stopped patronising me because he now produces the same product. During the closure, most Nigerians lost billions of naira, goods got spoilt, and some expired.
We need a stakeholders’ meeting. We cannot continue to have someone who does not have business orientation to be made the minister of commerce and industry. For instance, egg is now like gold because maize has been banned from importation, therefore the feeding of chicken has diminished, and nothing is being done.
Where do you have your biggest market?
I have my market everywhere.
How has the African Continental Free Trade Area agreement helped local manufacturers in terms of movement of their goods?
The people AfCFTA will benefit the most are the foreigners. They control the market, especially the importation of raw materials used in the productive sectors. I mean the Chinese and Lebanese; these guys are mafias.
What exactly do you mean by control?
I meant the chemicals and other raw materials we use in production are imported by them. Mind you, they are also into manufacturing and their prices are unbeatable.
One of the benefits of AfCFTA is to help reduce tariffs. Has local manufacturers started enjoying tariff reduction, and what percentage?
We are in a country and continent where we work on the surface. If the promises made are not fulfilled, we are not bordered. For now, no benefit or incentive has been given to us, except they will do that later.
Aside bigger companies, what other challenges are local manufacturers facing?
One day, I went to the bank to borrow money, they said they could lend N5m without collateral, although what I needed was about N30m. After applying for the N5m, at a point I was told to bring my car document. Mind you, they said without collateral! They said that was not enough, I had to submit my jeep. Again, they said the value was still not up to the value for the N5m loan, so I had to bring the document of my landed property, making three items. But initially, they said without collateral. Banks are supposed to be saviours for stakeholders, rather you will be in trouble when you are owing them. In foreign countries, they are more hospitable to stakeholders and are always willing to assist.
Let’s narrow it down; what is the biggest challenge that, if solved, will help local manufacturers?
We have two major challenges: finance and power. These two things are important. For instance, I spend N7,000 on diesel daily in my factory. Calculate that in a month, and in one year I spend close to N3m.
We have the Bank of Industry, yet they are not there to assist anyone. They will ask you to apply for a loan, bring all your members to apply, but at the last minute, they will unveil some hidden conditions that were not stated from the beginning.
With eyes on post-COVID-19, what policies do you suggest the government should put in place to enhance the market for local manufacturing?
We expect them to do nothing than make funds available, and stop passing wrong news through the newspapers. The COVID-19 in Nigeria is a scam, if a state governor could come up and tell us that anyone that has malaria symptoms should be counted as a patient of COVID-19. We are already in COVID-19 long before now because the odours from the gutters we perceive alone is more than COVID-19, yet the government is not saying anything. Government said they budgeted some billions for vaccines, but one has to be alive to protect his or herself from COVID-19.
People are hungry. Some are dropping out of school. These are bad signals to the country. Many students are now into gambling. Originally, it wasn’t their plan to go into such an act. Now, the Academic Staff Union of Universities strike has been on for a long period of time, leaving young men and women stuck at home. Even with the COVID-19, our leaders’ children are still travelling outside the country (to get education) while our children are thinking of how to graduate.
Funds are the basic thing to aid us. With this, every other thing falls into place automatically.
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