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Why Rise in Cost of Imported Goods Won’t Boost Nigeria’s Manufacturing

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Manufacturers
  • Why Rise in Cost of Imported Goods Won’t Boost Nigeria’s Manufacturing

As global shipping companies are working on plans to mitigate the projected rise in cost of shipment in 2020 when the United Nations shipping agency, the International Maritime Organization (IMO), is expected to start enforcing its demand for low sulphur emission marine vessels globally, local manufacturing sector of most economies would expand as the cost of imported goods increases.

Unfortunately, Nigeria’s manufacturing sector would suffer substantial contraction due to the sector overexpose to diesel, a low sulphur fuel used to power most electricity generators by companies in Nigeria.

Experts predicted that the increase in demand for low sulphur fuel would lead to an equal increase in demand for diesel as shipping firms are expected to switch to diesel and other low sulphur fuel in 2020 before they devise a lasting solution to the new requirement.

Nations like Nigeria without stable power supply, where companies have to generate their own electricity, would suffer the most as not only the cost of imported goods that represents 90 per cent of its consumption would rise but also the local production currently being pushed by the Federal Government to increase job creation.

Local companies would have to pay more to produce a unit item and in turns pass the increase to VAT-saddled consumers. Suggesting that Nigeria’s consumer prices may surge in 2020, eroding the progress made so far.

The Chairman of the Manufacturing Association of Nigeria, Economic Policy Committee, Mr Paul Gbededo, explained that “Power is still the biggest challenge to manufacturers, especially the ones in the Small and Medium Enterprises sector, because they rely almost totally on public power supply.

“The big firms generate their own electricity most of the time and the cost of generating this power increases the cost of production and therefore the products may not be competitive even in Nigeria.

“That is why solving the issue of electricity will see us becoming more competitive and easing the pain of manufacturers.”

While this could have been an opportunity to further government diversification agenda and compel Nigerians to buy local substitute products, it would, in fact, worsen current situation of things as the few local manufacturers may struggle to keep their factories open and if they manage to do so, it would be at a higher operating cost.

Abayomi Awe, the Chief Operating Officer at Rehoboth Chops & Confectioneries Ltd, a bakery that uses giant diesel-powered ovens to bake hundreds of loaves of bread daily, said his company uses generator for at least 20 hours per day due to the unstable power supply in the country.

“It becomes difficult for us to expand if the price of diesel goes up,” he said as bakers scrambled to pull finished loaves from steaming ovens. “It might result in some companies, some bakeries like ours, shutting down.”

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.

Business

Npower News: Npower Stipend News, Npower News on Permanency

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npower latest news

Npower News on Permanency and Payment of Allowances

The N-power Youths Congress has made passionate plead to President Muhammadu Buhari to fulfill the campaign promise he made to the 500,000 Npower Batches A and B beneficiaries.

The group led by its national coordinator, Comrade Joseph Enam Magar, to the NUJ Press Center Maiduguri demanded the payment of all outstanding allowances of N30,000 for exited Batch A and Batch B from June 2016 and July 2019, respectively.

Maga said “We are hereby once again reminding the government of their promises to us and that we will never relent until federal government fulfils it’s promises. The State Representatives of Npower Beneficiaries have earlier stated our demands on the previous Press Conference and here we are reinstating the demands again.

“The Batches A and B of N-power Beneficiaries who according to the Minister of Humanitarian Affairs and Disaster Management were disengaged since the month of June and July respectively are not happy for being sent back to the streets.

“We were struggling in different spheres of life to make a living. We were meant to quit the things we were doing before to embrace Npower with the promise of being absolved into the Federal Government scheme at the end of the day.

“We were made to serve our fatherland with a token of 30,000. Most of us have families with children, paying of school fees, electricity bills, pipe borne water, transportation, feeding and other miscellaneous expenses on the grace of 30,000.

“How much is a bag of rice, ground nut oil, etc if I may ask? Some of us have siblings and sick parents whose hopes are attached to the same 30,000.

“To worsen it all, the same 30,000 will not be paid as at when due. Funny enough, our government under the control of Sadiya Farouk, the Ministers of Humanitarian affairs and disaster management want us to save from the 30,000.

“This is an amount that is not up to one quarter percent of what they give to their children for shopping; an amount that does not reach what their children put on as cloths and jewelries on daily basis.”

Speaking further he said,” in addition, we can recall that before the 2019 Presidential Election, we were made to understand by Mr. Afolabi that our voter’s cards determine our permanency. “

“We mobilized ourselves, came out in mass to support this government. We spent our money going to Abuja for the campaign so as to ensure that President Muhammad Buhari regains his office as the president of Nigeria. Npower beneficiaries in various states and Local Governments were equally forced by their focal persons to come out in mass during APC campaign.

“So many states even took attendance and beneficiaries that didn’t show up were penalized. All these were geared towards ensuring that Mr. President, President Muhammadu Buhari excel as the president so that the promises of absorption that was made through Mr. Afolabi will be fulfilled.

“But at the end, our hopes were truncated as we have been pushed back to the streets without absorption or an exit package.”

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MTN Nigeria Picks Karl Toriola as Chief Executive Officer (CEO) Designate

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Karl O Toriola

MTN Nigeria, Africa’s leading telecommunications company, has appointed Mr. Karl Toriola as the Chief Executive Officer (CEO) designate.

In a statement released on the Nigerian Stock Exchange’s website, the company said the appointment is effective from the 1st of March 2021 to give enough time for an orderly handover.

According to the company, Mr. Toriola is presently the Vice President of West and Central Africa (WECA), excluding Nigeria and Ghana, since 2016.

The statement reads “During his tenure, the WECA markets have made significant commercial and strategic strides. These include the improvement of market shares within the region and the development of mobile financial services.

“Since joining the Group in 2006, Mr. Toriola has also held a number of senior operational roles including Chief Technical Officer of MTN Nigeria, CEO of MTN Cameroon and MTN Group Operations Executive. Mr. Toriola has at various times in his career in MTN Group, had oversight responsibility of 16 of the Group subsidiaries and serves on various MTN boards, including MTN Nigeria.

“Mr. Toriola obtained a Bachelor of Science in Electronic and Electrical Engineering from the University of Ife, a Master of Science degree in Communication Systems from the University of Wales, and attended the General Management Program at Harvard Business School. In addition, he has attended several executive development courses at various institutions including Wharton Business School, Institute of Management Development and London Business School.”

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NESBITT Acquires Peugeot Nigeria, Plans to Invest $150m in the Company

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Peugeot

NESBITT to Invest $150 Million in Peugeot Nigeria

Peugeot Automobile Nigeria (PAN) has been acquired by the NESBITT Investment Nigeria, according to the statement from NESBITT.

The new owner planned to invest $150 million into the company in the next three years to revamp the automobile company.

It said the $150 million would help retool and upgrade PAN’s assembly line and boost working capital.

Speaking on the acquisition, Ahmed Wadada-Aliyu, the new chairman of PAN, said the automobile manufacturer would be introducing new brands into the market to establish brand affordability in Nigeria.

PAN under the supervision of the board shall undergo massive restructuring, and in so doing, we shall observe strict governance protocols, transparency, business integrity, efficiency and ethics in our undertakings,” he said.

“In 2019, Nigeria imported at least 400,000 used cars as against 68,000 brand new vehicles. Because of this imbalance, PAN will be introducing new brands of vehicles into the market to re-launch brand affordability in Nigeria such that Nigerians will have access to brand new vehicles.”

“Our biggest concern is the over 50 assembly plants that have not made any matching investments but are enjoying the incentives of the auto policy.”

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