By Merit Ibe, [email protected]
Manufacturers Association of Nigeria (MAN) is lamenting that several of its members are struggling with unfair competition from imported products from Asia flooding Nigerian markets, due to the nation’s porous borders.
The association said the reason for the influx was largely due to the inability of several manufacturers to import essential raw materials in the face of acute forex scarcity. According to the association, the situation is severely inhibiting their production and productivity across the country.
President of MAN, Mansur Ahmed, who made this observation said many of its members are still being confronted with the aftermath of the COVID-19 pandemic were yet to recover, the current influx of foreign products into the Nigerian markets via the land borders remains an impediment to local industries capacity utilisation..
Ahmed explained that the forex scarcity is still a bottleneck for several manufacturing firms operating in the country hence, stifling raw materials’ importation with inflationary pressures.
He explained that several manufacturers are still sourcing forex from the parallel market at very exorbitant rates.
“Several manufacturers are not able to import vital raw materials because of forex scarcity, a situation which is severely inhibiting their production and productivity. Many are forced to source forex from the parallel market at exorbitant rates. Manufacturers are yet to recover from the shocks of the COVID-19 pandemic and accompanying recession.”
Speaking on manufacturing sector’s contribution to the country’s GDP (Gross Domestic Product), the industrialist stated, “Manufacturing contribution to GDP is still less than 10 percent. The growth recorded in the sector in the fourth quarter of 2021 was a mere 2.28 per cent, after a contraction of 2.75 per cent in 2020.
Manufacturers are struggling with unfair competition, especially from products imported from Asia now flooding the Nigerian market, largely because of the porosity of the borders. “These imports are often much cheaper than goods produced locally.
“The cost of logistics has continued to be on the upward trend, driven largely by the state of the roads, the limited freight capacity of the railway system, the crisis at the major ports, the traffic gridlock around the Lagos ports and extortions in the logistics chain.
“The manufacturing sector offers good prospects for job creation and lifting more Nigerians out of poverty in line with the government aspirations. But if the burden of tax becomes excessive and unbearable on this critical sector, the realisation of these outcomes by government would be difficult.
“Difficulties associated with sourcing forex by manufacturers further worsened in the fourth quarter of 2021 as against what obtained in the preceding quarter as 75.1 per cent of manufacturers claim that forex sourcing by the sector did not improve in the fourth quarter which is higher than 59 per cent that disagreed in the preceding quarter.”
Ahmed pointed out that limited access to funds variously has been identified as a persisting challenge of the manufacturing sector and if not addressed properly by the authorities, some manufacturers won’t be able to be competitive and this would lead to collapse of more firms in the country.
The MAN helmsman explained that large numbers of manufacturers noted that the smallness of size of commercial bank loans to manufacturing does not support productivity in the sector.
According to him, some manufacturers have lodged complaints at the MAN secretariat that the current commercial bank loan does not encourage productivity in the sector.