By Merit Ibe
Manufacturers in Nigeria have continued to decry worsening security situation that is negatively impacting businesses and lowering their resilience capacity.
The spate of insecurity, according to them has caused huge revenue losses in production as some warehouses are filled with unsold goods nationwide, leading to artificial scarcity of products in some parts, while raw materials for production are also becoming scarce.
Part of their complaints is that insecurity is compelling manufacturing firms to pay high premium for insurance cover. At the moment, news have it that armed bandits insist on payments before farmers can have access to farmlands in the planting season, only to return during the harvest season and extort farmers for further payments. Many displaced people cannot access their farms to plant or harvest crops. This has led to scarcity and a surge in the prices of certain food commodities.
Insecurity has led to many businesses and households bearing newer security costs to protect their assets and, in many cases, secure their safe passage from one destination to another.
Communal clashes, as well as the farmers-herders crisis, has, among other reasons, been taking a toll on local access to raw materials for production; even business owners and farmers are not safe to go about their businesses.
The manufacturers operating under the umbrella of Manufacturers Association of Nigeria (MAN) explained that there have been multiple attacks, hijacks and loss of goods worth billions of naira, reported to the Association’s secretariat from different locations across the country.
A member of MAN who spoke to Daily Sun, noted that some renowned conglomerate companies have reported to the Association about goods stolen following attacks, hijacks and mass looting of their products along the highways in the course of movement with billions of naira lost in the process. He explained that there were reports of massive extortions by security agencies, saying truck drivers were being forced to pay illegal monies to security personnel.
“We are experiencing trying times in Nigeria’s manufacturing sector in terms of this worsening insecurity that is leading to our goods being hijacked and looted on our roads and if this is not checked it will lead to the collapse of lots of firms.
“Besides, not only manufacturing, it will get to banking, it will get to insurance and Nigeria will collapse as a nation. You know, you have lost a lot in revenue.
“Even if you are insuring it, how long will an insurance firm continue to pay for damages, won’t they wind up? Even if you are paying premium, it will get to a point the insurance company will wind up. So the thing there is for this government to sit up.
“Government has disappointed everybody and they are not secured in Aso Rock. They have just left us on our own to fend for ourselves.”
Executive Secretary of the National Association of Small and medium Scale Enterprises (NASME), Eke Ubiji, said in a state of insecurity businesses cannot thrive. There cannot be confidence in the environment. Investors confidence is eroded, the unfriendly environment is scaring businesses. Some businesses are even folding up due to high insecurity situation, especially those whose large part of their raw materials come from the Northern part. I hope the situation can be redeemed as early as possible
Lagos Chairman, the Nigerian Association of Small Scale Industrialists (NASSI), Gertrude Akhimien, said the manufacturing sector depends on raw materials for production and sources of these materials are in the hinterland. Because of the bad situation, manufacturers cannot move to source for them.
“That is why the little they get is very expensive. By the time they produce they cannot help but increase price which gets high for consumers. It’s a sad situation which is not helping businesses at all. We appeal to government to take the issue of insecurity seriously because it is affecting every body including manufacturers. When prices go up you can’t blame producers, because the situation is bad.
“People are afraid to go to farms and afraid to travel to bring in raw materials needed by manufacturers for production. For businesses to run effectively and for the economy to be sustained, the NASSI boss emphasised the need for government to put in place security measures if businesses must continue, noting that businesses thrive in a peaceful atmosphere.
She pleaded that something has to be done at the state and federal levels to tackle insecurity urgently, saying it has become an emergency situation.
The Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, noted that while the impact of insecurity varies across the sectors, one of the hardest hit is agriculture.
“One can estimate that the sector must have lost close to 10 per cent of its contributions to GDP. The value of the 10 per cent is a huge cost. The sector has lost 10 per cent of its output. For those in manufacturing, many producers are unable to distribute their products in many regions in the country.”
For the allied sector, Yusuf noted that the inability to distribute goods across the nation is a concern as distribution goes beyond having security escorts, even when the environment is denying manufacturers access to markets.
He added that many producers are closing their sales outlets in troubled regions.
“Access to raw materials equally remains a challenge to manufacturers, especially grains and agro-allied products. Limited access is causing scarcity alongside the CBN forex policy.
“Those in the business of logistics and transportation are equally affected as many are avoiding going to many zones due to insecurity. The risks are getting higher. People are also reducing their travels due to the challenge.”