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19 Firms Shut, 250,000 Jobs Threatened by WEMPCO Crisis

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  • 19 Firms Shut, 250,000 Jobs Threatened by WEMPCO Crisis

The current crisis facing the Western Metal Products Company has led to the closure of no fewer than 19 enamelware firms, while 250,000 jobs along the steel and enamelware value chain are also about to end, investigations by our correspondent have revealed.

WEMPCO is reportedly facing a huge debt burden of over N90bn, planning to sell its flagship five-star Oriental Hotel on the island and considering exiting Nigeria.

This may mean the end of its 700,000 tonnes-capacity steel plant.

Our correspondent gathered that the 40-year-old firm was the authorised sole distributor of cold-rolled iron sheet, used in the manufacturing of roofing sheets and annealed iron sheets used in the manufacturing of enamelware.

The Central Bank of Nigeria, in order to protect the local manufacturers, had included cold rolled iron sheet and annealed in the list of 41 banned items from access to official foreign exchange.

The implication is that all the firms that produce roofing sheets and enamelware in Nigeria may have to shut down in the event of WEMPCO’s exit.

Already, all the firms manufacturing wheelbarrows and shovels are said to have shut down while others are winding down gradually having run out of stock of raw materials.

It was gathered that WEMPCO’s trouble stemmed from the influx of substandard roofing sheets smuggled into Nigeria from Cameroon and other neighbouring countries.

The local firms were said to have been mandated by the Standards Organisation of Nigeria to keep the standard of roofing sheet at 0.015mm in thickness.

This posed competition challenge against smuggled roofing sheets which were 0.013mm and 0.014mm.

The smuggled versions were also said to be preferred by buyers because they were cheaper.

Low patronage set in for WEMPCO and its stock of unsold products went bad from staying too long in storage.

By last year, the company had closed down almost all its plants as they were no longer producing.

Our correspondent also spoke to some of the buyers of WEMPCO products who recounted a different version of the story.

All of them, who spoke on condition of anonymity, said the firm was not consistent in filling orders.

It was alleged that they either took too long in delivering the product or delivered items different from the specification.

WEMPCO was also alleged to have abused the exclusive rights and waivers that were granted to it by the Federal Government.

Our correspondent learnt that whereas the previous government had granted the firm heavy waivers to aid it in production of cold-rolled sheet locally, the firm had instead embarked on heavy importation of the product.

Trouble started for it when the current administration came into power and decided to cancel the waivers.

It then became a Herculean task for WEMPCO to fill orders as the importation route had been closed and they could not produce to meet local demand.

Customers, who paid money into WEMPCO account, neither saw their money nor the goods they paid for. The bank held onto customers’ money because WEMPCO was heavily indebted to the bank, it was alleged.

When our correspondent sought an audience with Robert Tung, the Managing Director of WEMPCO, he declined the calls and did not respond to text messages sent to his line.

Our correspondent put a call through to a consultant to the firm, Jide Mike, but he denied ever working for WEMPCO; he also said he knew nothing about the company.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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