Naira Scarcity: Manufacturers Decry 25% Sales Decrease, Urge FG’s Urgent Intervention
Manufacturers Association of Nigeria, MAN has lamented the effect of naira scarcity on its members, saying that sales of manufactured goods dropped by 25 percent.
The association called on the federal government to urgently and permanently put an end to the challenging situation caused by the introduction of new naira notes and its scarcity.
This was contained in a statement signed by the Director-General of the Manufacturers Association of Nigeria, Segun Ajayi-Kadir expressing the plight of manufacturers.
The manufacturers noted that their businesses had been badly hit by the current cash crunch, adding that it affected the turnout of workers which brought about low output and more than 25 percent decrease in income.
Investors King learnt that the Manufacturers Association President, Otunba Francis Meshioye had last month warned against the impending negative effect of the naira scarcity on manufacturers.
He mentioned that the sales of manufactured goods will significantly drop which is presently playing out.
Speaking on digital banking services, the MAN president said online transactions including the use of point of service, POS has not been working effectively thereby making the sales process slow.
Meshioye stated that the nation’s economy has also been negatively impacted which may scare present and potential investors from investing in the country as they are particular about what their resources would yield.
“I want to assume that this is a very short-term problem. It is general. Even if you want to do e-banking, there are some things you cannot do at the moment. We have problems. PoS is not working.
“There is no way the scarcity of something that is essential to the consumer will not affect the producer. We feel it because it hinders the proper flow of our goods to the end user. What effect is that going to have? It means we will pile stock and when we pile stock, it means cash is trapped. We pay high interest rates and they would not yield good returns and investments go to where returns come regularly.
“This is a very big issue in the economy. If you put all these together, you will agree with me that we are really facing a critical time as manufacturers,” he stated.
Increased Cost of Customs Duty, Forex Crisis Affects Used Vehicles Imports Volume in Nigeria
Used Vehicles auto dealers in Nigeria have expressed concern over the decline of Tokunbo car imports volume in 2022.
According to the dealers, Tokunbo car imports dropped by 47% as a result of the increased cost of customs duty and the forex crisis.
These auto dealers disclosed that the increased cost of duty on used vehicles by Nigerian customs has affected their car sales. They lamented that the import duties have also affected the number of cars they import into the country which has drastically reduced.
It would be recalled that in April 2022, the Nigerian customs announced that it would update the importation of car edition from 2017 to 2021 in compliance with the ECOWAS Common External Tariff (CET) to the 2022-2026 version in which used cars coming into Nigeria are expected to pay a 20% tariff rate and a NAC levy of 15 percent.
The NAC levy, coupled with the Value Added Tax (VAT) of 7.5 percent, results in an almost 50 percent levy that is now paid on the importation of used vehicles in Nigeria.
Speaking on the decline of the importation of used vehicles in Nigeria, regional manager of Auto Auction Mall Oluwafemi Amisu said that the increase in import duties has 100 percent played an important role in the reduction of importation of used cars into Nigeria.
He also attributed the benchmark of car models to an increase in shipping cost leading to an increase in the price of the vehicles.
Shipping companies that formerly used 2,300 vehicle capacity vessels to ship into the country have visibly downsized to 1,000 or 1,500 capacity vessels.
“Majority of transactions made by Nigerians importing vehicles are within the 08-010 model range, which typically cost N400, 000 –N600, 000 to clear. However, since 2014 has been chosen as the benchmark, clearing costs have increased to between N1 million and N1.7 million,” he added.
Also, another challenge that has been attributed to the decline of importation of used vehicles in Nigeria is the Forex crisis which auto dealers lament has affected the purchasing power of customers. They added that people now prefer to buy Nigerian used cars instead of foreign used cars, even so, Nigerian used cars have also become very expensive.
Findings by Investors King reveal that the duty rate is majorly the reason for the drop in the importation of used vehicles, as most of the vehicles coming into Nigeria are below 2013, which mandates that any auto dealer bringing any car lower than that into Nigeria will pay a duty of 2013. Due to this, most of the vehicles are reportedly passing through Cotonou Port.
Ajay Banga Nominated as Sole Candidate for World Bank Presidency
The World Bank Group’s Board of Executive Directors has announced that Ajay Banga, a United States national, is the only nominee for the position of the next president of the bank.
This news follows US President Joe Biden’s nomination of Banga to lead the World Bank in February, citing his suitability for the role at “this critical moment in history.”
Banga, who was born in India and is a naturalized US citizen, is currently serving as vice chairman at General Atlantic and previously worked as the chief executive of Mastercard Inc. If confirmed, he would become the first-ever Indian-American to head either of the two top international financial institutions: the International Monetary Fund and the World Bank.
The World Bank’s Board of Executive Directors will now conduct a formal interview with Banga in Washington D.C., with the expectation of concluding the presidential selection in due course. The current president of the World Bank, David Malpass, is set to step down in June, nearly a year before his term is scheduled to expire, and Banga is expected to replace him.
Banga’s nomination comes at a time of increasing global economic uncertainty, with the COVID-19 pandemic exacerbating pre-existing inequalities and challenging the resilience of many countries’ financial systems. As such, the incoming World Bank president will face significant pressure to navigate the institution through these difficult times, while also addressing concerns around climate action and the role of the World Bank in promoting sustainable development.
While Banga’s nomination as the sole candidate for the position of World Bank president may come as a surprise to some, it also reflects the United States’ historical dominance in the governance of international financial institutions. However, it remains to be seen how Banga will use his position to shape the future direction of the World Bank and address the complex challenges facing the global economy.
Unilever Nigeria to Focus on Higher Growth Opportunities by Exiting Home Care and Skin Cleansing Markets
Unilever Nigeria Plc, one of the leading Fast-Moving Consumer Goods (FMCG) companies, has announced its decision to exit the home care and skin cleansing markets.
The company disclosed that the decision would only affect three of its brands – OMO, Sunlight, and Lux. According to Unilever Nigeria, the move is aimed at accelerating the growth of the organisation and sustaining profitability.
The restructuring of Unilever Nigeria’s business model is in response to the tough business environment in Nigeria, where many organisations and individuals have found it difficult to access cash due to the Naira redesign policy of the Central Bank of Nigeria (CBN).
Unilever Nigeria’s Managing Director, Mr Carl Cruz, noted that the offloading of the home care and skin cleansing portfolios would enable the company to “concentrate on higher growth opportunities.”
Unilever Nigeria has a strong competition in the business categories it is exiting. However, the company’s products are also market leaders in the sector. Mr Cruz added that the company was repurposing its portfolio by gradually exiting two categories, home care and skin cleansing, affecting only three brands (OMO, Sunlight, and Lux).
This would allow Unilever Nigeria to drive the rest of its brand portfolio for growth into the future and strengthen business operations with measures to digitize and simplify processes.
Unilever Nigeria is a truly Nigerian business and the oldest serving manufacturer in the country. The company’s decision to exit the home care and skin cleansing markets is in line with its commitment to adapt to changing market circumstances and reposition itself to better meet the needs of its consumers, shareholders, and employees.
Mr Cruz said, “By making these changes, we will unleash the sustained and profitable growth we need to be here for the next 100 years as well.”
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