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FOREX Hardships Cripple Tricycle Assembly Plants

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Forex

DIFFICULTY to accessing foreign exchange to bring in Completely Knocked Down (CKD) parts have started crippling tricycle and motorcycle assembling plants in the country with spillover effects on outsourcing companies that supply labour to the industry.

A reference point is Dag Motorcycles Industries Nigeria Limited, the assemblers of Bajaj tricycles and motorcycles.

Ademuyiwa Abe , the company’s Secretary/Legal Services, said the firm has been forced to cut down its 1,000 per day production capacity by 40 percent and terminated the services of Ashton Consulting Ltd, who supply the labour, until the situation improves.

According to him, the forecast for the Nigerian economy for 2016 is not looking too good, hence, we were forced to cut back on some of our operations.

“In the last few months of last year, there was restriction on foreign exchange by the Central Bank of Nigeria (CBN); so most of the time, there was no foreign exchange to bring in the CKD, not just the CKD, but other items required for assembling. Since there was no more foreign exchange, the situation became so bad that we had no choice but to terminate the services of our contractor who supplies the workers that do the assembling,” he said.

“We are appealing to the government to consider manufacturers in the country, the exchange rate is gradually killing our business, we import at a certain rate and by the time we want to order for more materials we find that the value would have gone up to what we cannot afford thereby increasing the cost of production.

“We are doing all we can to make sure that we actually remain in business. We have submitted our list to the CBN to include us in the priority list but secondly, there is a fallout consequences that may come up because the exchange rate will not be the same with what it was,” he stated.

Fielding question on the impact of the forex on products price, he said: “Today it’s N285 to a dollar at the parallel market and if we factor other costs into it, you will find out the cost of the finished product will be out of the reach of the poor. When you think of buying a motorcycle with almost half a million, you will either think of buying a small car to use . With the current situation, the finish product will no longer be affordable and if it is unaffordable, the market segment is out of reach because there will be no demand and the purchasing power will definitely be affected.

“I will like to say this is a foreseeable problem likely to be encountered even if the foreign exchange is available for the manufacturing sector. This is a big problem” he said.

He explained that the production cuts affected Ashton Consulting Limited which supplies the workforce to the company.

“With this decision, there is bound to be reactions, because we are talking of 250 workers. The contractors understood the situation very well but the workers are the ones creating issues with fallout to the end users of the motorcycles. The workers have already gone to some media houses to express their grievances, so we felt we have to let the public know what really happened so that there will be no mismanagement of information. If the situation improves and CBN lifts the ban on forex, we will call on them to recruit new or existing workforce,” he said.

“There had been allegations that we terminated our contracts with our consultant based on the fact that we did not increase salaries, this is not the true position of what transpired. We are all aware about the CBN’s foreign exchange restriction policy. The motorcycles and the tricycles we assemble here were brought in as CKD for us to assemble, but the rate at which these CKD are coming, we could not afford the exchange rate bearing in mind other factors included in cost of production.

“We notified our contractors based on the contract we had in hand because we do not deal with the workers directly but the contractors who recruited them. At the moment we are not producing hoping that as things improve, we can get back to operation.

“Ashton is an independent contractor and also a limited liability company and independent of us. It is just the contractual partnership we have with them and there is simply no nexus with the company. This partnership has lasted for over 5 years. We did not terminate this contract based on poor performances by the workers but simply doing this based on a national issue.”

Vanguard

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Merger and Acquisition

United Kingdom Ordered Meta, Formerly Facebook, to Sell Giphy

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Facebook Meta

The United Kingdom’s Competition and Markets Authority (CMA) has instructed Meta – formerly known as Facebook – to sell Giphy, the American search engine that allows users search for and share short looping videos which are without sound, that are similar to animated GIF files.

The CMA stated that the merger deal could possibly be harmful to social media users and advertisers in the UK. It also found that the deal would further boost Meta’s already strong market power, as it would limit other platforms’ ability to use Giphy GIFs, which will, in turn, drive more traffic to sites owned by Facebook (WhatsApp, Instagram and Facebook).

According to the CMA, Meta’s sites dominated social media usage time up to around 73 percent, and could eventually outperform social media rivals like TikTok, Twitter and Snapchat by leveraging Giphy. The Authority then added that before the merger, Giphy had launched ”innovative advertising services” which brands like Dunkin’ Donuts and Pepsi which it could possibly have brought to the United Kingdom.

The CMA also stated that at the time the merger was made, Giphy’s advertising services were terminated by Facebook. That move removed a vital part of potential opposition in the market. The CMA was concerned by this move, calling it particularly concerning considering that Facebook is in control of about half of the £7 billion display advertising market in the UK.

Facebook had acquired Giphy for a reported fee of $400 million, with an aim of integrating the service into Instagram. After a month, the CMA started an investigation into the merger and decided in August that Facebook could hinder social media rivals such as TikTok and Snapchat from tapping into Giphy’s GIFs.

Meta had initially stated that the CMA did not have jurisdiction because Giphy was not operational in the United Kingdom, adding later that Giphy’s paid services were not display advertising by the definition of the CMA.

In October, Meta was fined $70 million by the CMA for breaking some rules related to the deal by failing to report necessary information and changing its chief compliance officer on two different occasions without receiving permission.

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Brands

Burger King Expands to Nigeria

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Burger King

Burger King, an American multinational chain of hamburger fast food restaurants, has opened its very first restaurant in Nigeria to deepen its growing brand, support new job creation and enhance economic productivity in Africa’s largest economy.

The United States Mission in Nigeria has praised the improving commercial ties between Nigeria and the United States as American franchises and branches set up shops in Nigeria. This has in turn created more jobs as well as investment opportunities in the country.

This was said by the US Mission Commercial Counselor, Jennifer Woods during her speech at the opening of the Burger King outlet in Nigeria. Woods underlined the impact which new businesses have on a country’s economy, especially with a popular franchise like Burger King opening in a developing market like Nigeria.

She said that being Africa’s largest economy and a large youth population with a strong connection to the world, American brands must look at Nigeria as a highly critical market. She went ahead to state that while the companies will benefit from the expansion into the country, Nigeria itself will also benefit largely from their presence in the country.

Woods also described the addition of another American-owned franchise (one that emphasizes a culture of excellence) will help to provide job opportunities as the business expands to new parts across the country. She praised the high level of interest by consumers and the passion which they have for the iconic American rapid service restaurant since it began its operations in early November.

The Speaker of the Nigerian House of Representatives, Honourable Femi Gbajabiamila congratulated Burger King and all its local partners on the intriguing business deal, explaining it as another signal of the benefits of a close business relationship between the United States and Nigeria. He also stated that Burger King is expected to open hundreds of outlets across the country.

Burger King entered into an alliance with local firm, Allied Food & Confectionary Services Limited in order to bring the American brand into the Nigerian market. The Group Managing Director of Allied Food & Confectionary Services Limited, Antoine Zammarieh has prior experience bringing United States rapid service restaurants to Nigeria.

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Company News

Panasonic Confirms Data Breach after Hacker Attack

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Panasonic Nigeria

Japanese tech giant Panasonic has affirmed that the company has been a victim of a data breach after some hackers were able to access the company’s internal network.

In a press release dated November 26, the company stated that its private network was illicitly accessed by a “third party” on November 11, and also stated that some data which was on a company file server had been retrieved during the breach.

However, a spokesperson for Panasonic, Dannea DeLisser stated that the data breach started on June 22, and ended on November 3. She also said that the very first unauthorized access was detected on November 11.

The company which is based in Osaka, Japan provided additional details about the breach. In the press release, the company said that although it is conducting its own investigation into the breach, it is also working with a third-party organization to investigate the data leak. The third party organization is also looking into whether or not the breach included personal information of customers or sensitive information which concerns social infrastructure.

Immediately the unauthorized access was discovered by the company, the incident was reported to the appropriate authorities who went ahead to set up some security countermeasures, which also contained steps to avert external access to the network. The company closed the statement by apologizing for concerns and inconveniences caused by the data breach.

This type of incident is not completely new to Panasonic, as just under a year ago Panasonic India faced a ransomware attack in which hackers leaked about 4 gigabytes of data, including email addresses and financial details.

The data breach also comes at a period when Japanese technology companies are facing waves of cyberattacks. NEC and Mitsubishi Electric were victims of hackers in 2020, and Olympus was also made to suspend operations in Europe, Africa and the Middle East after being a victim of a ransomware attack.

The trend of cyberattacks in Japan is likely to reduce public faith in the company, especially since it has been hacked twice since last year.

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