The scarcity of foreign exchange for importation of raw materials by local industries is adversely affecting the sector as over 50,000 workers have lost their jobs in Abuja in the last two months.
The President, Abuja Chamber of Commerce and Industry, Mr. Tony Ejinkeonye, confirmed the job losses in an exclusive interview with our correspondent in Abuja.
Similarly, the President, Manufacturers Association of Nigeria, Mr. Frank Jacobs, said that about 10 companies had formally notified the association about their intention to shut down operations before the end of this month.
“Currently, in Abuja, we have about 50,000 workers that have lost their jobs in the last two months. I must confess this is not a good time for the manufacturing sector,” he said.
He said majority of manufacturers operating in Abuja could no longer access foreign exchange to import raw materials, adding that those who managed to get forex from the black market could not sell their products as consumers could not pay the high prices.
He said, “As manufacturers and industrialists, the scarcity of foreign exchange has affected us in the area of raw materials that need to be imported. We cannot access foreign exchange anymore to import raw materials.
“Also, maintenance of some of these facilities has become a problem because the spare parts have to be imported and the inability to get foreign exchange to import them has impacted negatively on our operations.
“Some of our members who are manufacturers have even gone to the extreme of withdrawing their goods from the market and need to increase their prices to reflect the high foreign exchange rate. Many of us are having the problem of retaining our workers because the production is being hampered by lack of raw materials.”
The ACCI president said the situation had become so bad that even big manufacturing companies such as Unilever Nigeria Plc, Dangote Cement, Air France and Emirate Airlines were having problem getting foreign exchange.
He stressed the need for the Federal Government to come up with a comprehensive approach that would address the problem.
He said, “There is a need for government to do something urgently and stop living in denial. The Central Bank of Nigeria and the Ministry of Finance should come out and say something that would move us out of this forex crisis.
“Things are really bad. As I’m talking to you now, Unilever, Dangote Cement and our other members are crying. A lot of companies have also threatened to lay off workers. If something urgent is not done within the next 30 days by the government to address this, you will see companies like Dangote and Unilever Nigeria sacking some of their workers.”
Ejinkeonye added, “Airlines like Air France and Emirates are really having very serious problems now in taking back their foreign earnings.”
The MAN president said about 10 companies had indicated its plan to close shop before the end of the month.
He said with each of these companies employing an average of 200 people, a total of 2,000 workers would be affected if they decided to shut down their operations.
He said, “A number of our companies have formally written to us that they are going to close shop. Currently, we have about 10 companies that have written us informing us that they are running out of raw materials and that by the end of this month, they may close down.
“We do know that it is going to be more towards the end of the first quarter because many of them that have raw materials that can’t replenish them are likely to shut down.”
Jacobs called on the government to revisit the ban on 41 items from accessing the forex from the official window, especially items considered essential raw materials for manufacturing.
He said, “Many companies that have applied for foreign exchange for even those items that are not on the 41 ban list are finding it difficult to access foreign exchange from the central bank. So, we are calling on the CBN to make foreign exchange available for essential raw materials.”
Online Shopping Skyrockets Amidst COVID-19 Pandemic
Lagos, Tuesday 30 November 2020 – As we experience the first-ever Black Friday promotional phenomenon under lockdown, the dominance of online shopping platforms has become crystal clear.
To keep track of this development Nielsen Global Connect has conducted extensive research that includes an overarching view of the massive increase in online FMCG shopping and just how rapidly it evolved over the first six months of lockdown.
Nielsen Connect, Global Intelligence Unit, Executive Director Ailsa Wingfield comments; “Amidst the COVID-19 pandemic, online FMCG shopping usage has advanced by up to five years in just six short months. As a result, there has been a rapid increase in online shopping and usage with new users, frequency and preference having skyrocketed.
Preference of online as the most-used channel has also more than doubled.
Evidence of this results from the Nielsen New Shopper Normal Study which was conducted in May 2020 allowing for powerful insight into the effect of the COVID-19 lockdown on consumers, during an unprecedented time in our history.
The Nielsen study found that in terms of new Nigerian FMCG online shoppers, 29% had never shopped online. Sixty-seven per cent recently shopped online during the past week and 12% shopped most often online during the past week versus only 7% pre COVID-19. In terms of Frequency, 23% said they shopped online multiple times a week and 44% shopped once a week.
The best of both worlds
Nielsen’s consumer and retail measurement evidence therefore clearly shows a massive and ongoing move to online, but it must be pointed out that this is not in isolation when considering the overall shopping journey. In Nigeria, two-thirds of consumers (67%) say they are now using both online and offline channels with fewer exclusive brick & mortar shoppers at 33%.
Wingfield elaborates; “Overall, consumers are shopping and buying in a mixed reality. In many instances, online shopping options are a new addition to their existing store repertoire but most consumers indicate that they will maintain a combination of online and offline – which will lead to the rise of more omnichannel shopping journeys and experiences.”
Interestingly, this adoption is even more pronounced for ‘Constrained Consumers’ – those who have been impacted by job/income loss. These consumers are less likely to be exclusive Brick & Mortar shoppers as Omni shopping is even more important to help them make better and more frugal choices.
Wingfield adds; “The challenge for retailers is that consumers want equivalent experiences regardless of the environment in which they shop. These are categorised by a seamless experience where the retailer’s online, and bricks and mortar offerings, are connected and offer a similar and familiar shopping experience.”
Still more work to be done
In terms of the remaining obstacles for retailers to overcome and where online needs to work harder, the biggest concern for Nigerian shoppers is delivery which has emerged as the most important factor to get right. 42% of Nigerian consumers stated they wanted same/next-day delivery while 21% said they don’t want to wait when there are no slots available.
When it comes to Price & Promo perceptions, 57% of respondents said online prices had increased, while 22% perceived less online promotion and 17% said online was more expensive. That said, online price perceptions are currently more favourable than offline (brick and mortar) perceptions. They may also improve even further, following the heavy push by retailers of online-only Black Friday and year end seasonal promotions.
Looking to the future
Looking at how consumers’ newfound relationship with online shopping will evolve, Wingfield comments; “We saw that ‘necessity catalysts’ such as safety and precaution considerations and the availability of products initially drew consumers online, but there are still several obstacles to overcome. To sustain online FMCG traction, retailers and brands will need to focus on how they can solve consumers’ changing needs by differentiating their offerings in the Omni shopping journey.”
She goes on to suggest; “They will need to solve for overall satisfaction and experiences in the areas of time, convenience, availability and value based on consumers’ altered circumstances to truly differentiate themselves.”
Rising Operating Costs, Exchange Rates, Service Charge Increased Airfares by 100%
Price of air tickets rose by 100 percent across several routes as rising operating costs, high foreign exchange and surged in service charge forced airline operators to raise airfares.
Airlines attributed the increase to a series of price adjustments and the introduction of new fees by the Federal Airport Authority of Nigeria (FAAN). According to them, airline firms were given special concessions, which will continue to push price up and could hit an average of N100,000 for even the Lagos/Abuja route.
Speaking on the situation, Captain Ado Sanusi, the Managing Director of Aero Contractors, said airline companies could not access forex at the official rate while the FAAN had upped its fees.
He said “We were buying dollars at N360 and it went to N380 but you can’t get it for less than N480.
“We are paying VAT at 7.5 per cent. We are paying 15 per cent duty on our spare parts. The boarding passes, we pay 15 per cent duty on it.
“The passenger service charge has increased by FAAN. So, don’t look at one component but look at the total reason for the increase.
“Yes, there is an increase in demand but it is caused by the lack of aircraft and this lack of aircraft is caused by unavailability of spare parts which is also caused by dollar scarcity.”
Tony Elumelu Receives Licence to Kick Start Heirs Insurance Limited, Heirs Life Assurance Ltd
The Chairman of Heirs Holdings, Tony O. Elumelu, on Friday said the company has received operating licences from the National Insurance Commission (NAICOM) for its two new insurance companies, Heirs Insurance Limited (HIL) and Heirs Life Assurance Limited (HLA).
The Chairman disclosed this on his social media page.
In his words, he said “I am proud to announce that the Nigerian Federal Government, through the insurance regulator, the National Insurance Commission (NAICOM), has officially issued the operating licences for our new Group insurance companies – Heirs Insurance Limited (HIL) and Heirs Life Assurance Limited (HLA).
“This represents an important milestone of a long-term strategic journey in providing much needed, quality, & valuable financial services, to a broad demographic in Nigeria. Insurance should not be a luxury, and just as we have democratised other sectors, we will democratise insurance – applying our tried & tested business philosophies.
“Fueled by the determination to improve lives & leave a legacy in the African private sector, we have embarked on this journey to revolutionise the insurance space – deploying technology, customer understanding & operational excellence.
“It has been a five-year journey, but with the optimism & the resilience that have brought us this far, it has been worth the wait.
“I would like to warmly thank our new CEOs—Dr. Adaobi Nwakuche, MD/CEO of Heirs Insurance and Niyi Onifade, MD/CEO of Heirs Life Assurance, our Board members, regulatory partners, those who have believed in this dream, despite the obstacles, & those who have cheered us on.”
This is coming barely two weeks after Mr. Elumelu announced Transcorp has acquired Afam Power for N105 billion.
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