The difficulties in getting foreign
exchange and the steep fall in the value of the naira are seriously
affecting the manufacturing sector, with prices of locally made and
imported food items heading northward, IFE ADEDAPO writes
The scarcity of foreign currencies in
the country, especially the dollar, which has made it difficult for
manufacturers of essential food items to import raw materials into the
country, is threatening about 40,000 jobs.
Investigations by our correspondent
showed that the high cost of importation due to unprecedented fall in
the value of the naira has made importation difficult and expensive,
thereby resulting in many factories operating far below their installed
capacities.
It was also gathered that as a result of
the currency crisis, the prices of essential food items were gradually
rising as a direct consequence of the high cost of production and the
imported substitutes becoming more expensive.
The naira, which has been taking a
beating from the fall in global oil prices since mid-2014, tumbled to
391 against the dollar at the parallel market on Friday and has remained
at the Central Bank of Nigeria-pegged 199 to $1 at the interbank
market.
On January 11, the central bank stopped
the sale of foreign currencies to Bureaux de Change operators as part of
measures to reduce the pressure on the nation’s foreign reserves.
Since the announcement was made, the value of naira, which was 283 against the dollar at that time, has been depreciating.
Speaking with our correspondent on the
effects of the falling currency on food manufacturers, the Executive
Secretary, Association of Food, Beverage and Tobacco Employers, Mr.
Aderemi Adegboyega, lamented that hundreds of jobs out of the 40,000
workforce in the sector had been lost already and that those still in
employment were hanging on by the thread.
He said the business was no longer
profitable and firms in the sector were shutting down because they could
not afford to pay the salaries of workers, while producing very little.
“We need forex to buy raw materials as a
lot of our companies are producing below capacity, which is a big
problem. As we are not manufacturing, it means that some of our
employees are going to lose their jobs. In our industry alone, we have
about 40,000 jobs, and if care is not taken, there will be a lot of loss
in terms of the jobs,” Adegboyega warned.
While analysing the precarious situation
in the manufacturing and trade sectors, the Director-General, Lagos
Chamber of Commerce and Industry, Mr. Muda Yusuf, said many
organisations were becoming insolvent due to accumulated debts owed
foreign suppliers.
Yusuf stated, “Many have slowed down
their operations because of lack of forex, and many companies are not
able to pay their suppliers abroad; for those who took goods on credit,
the situation has created a major credibility problem for them. And
because of that, some of them have lost their credit lines.
“Many foreign airlines operating in the
country cannot remit proceeds to their home countries. For those who are
buying and selling; if they get the money to buy, how are they going to
sell? It is a very serious situation.”
Meanwhile, both local and imported food items have become expensive due to the scarcity of dollars
and the restrictions placed by the CBN on importers of certain food
items from assessing foreign exchange from the official source.
Investigations by our correspondent
showed that the prices of packaged water, bread, imported brands of
vegetable oil, rice, fish as well as ingredients for making
confectioneries had been on a steady rise since the restriction of forex sale was announced in June 2015.
Food retailers at the Ipodo Market,
Ikeja, Lagos State, told our correspondent that a carton of ‘Titus’
frozen fish, which sold for N9,000 in June last year, had increased by
33 per cent to N12,000 six months after.
One of the traders, Mrs. Folashade
Dasaolu, explained that the price of a carton of croaker fish, being
imported from Turkey, had increased by 14 per cent from N14,000 three
months ago to N16,000 presently.
“We don’t get as much quantity from our suppliers as we would like to because they have limited stock,” she added.
For imported vegetable oil, the owner of
Okikiola Ventures in the same market, Mrs. Abiodun Adefolami, said that
a 25-litre container of the product imported from Malaysia was now
selling for N8,200 instead of the previous N6,200.
The price of a 50kg bag of rice started a
steady ascent from N8,700 in August last year to peak at N10,000 in the
middle of November.
Statistics obtained from Novus Agro
Nigeria Commodity Index showed that the price of the product started
declining when the CBN lifted the ban on rice as part of the items
restricted from the official forex market.
The CBN on June 23, 2015 officially
stopped the sale of dollars to the importers of 41 items, in its quest
to reduce the pressure on the naira as well as preserve the country’s
external reserves.
The essential food items included on the
list are rice, margarine, palm kernel/palm oil/vegetable oil, meat and
processed meat products, vegetable and processed vegetable products,
poultry products like chicken, eggs, turkey, and tinned fish in sauce.
A bag of sachet water, which sold for
N100 in Lagos in January, now sells for N150, with the manufacturers
blaming the high cost of packaging materials for the price increase.
It was gathered that the rise in the
price of flour from N6,500 to N7,900 for a 50kg bag; imported fat from
N4,500 to N5,200; and sugar from N7,000 to N8,600 per 50kg bag, had made
bakers in Lagos to increase the price of a loaf of sliced bread to N250
as against N200 previously.
However, the Chairman, Association of
Master Bakers and Caterers of Nigeria, Lagos chapter, Jacob Adejorin,
said despite the rise in cost of raw materials, the price of the popular
‘Agege’ brand of bread had not changed.
Adegboyega explained that some of the
manufacturers had embraced the backward integration policy as directed
by the Federal Government, but that it would take some time before the
expected impact could be felt.
Citing examples of companies that had
started backward integration, he said, “Flour Mills of Nigeria Plc has a
farm that is called Suntil, where it is growing sugarcane and it will
eventually be producing sugar. UAC Foods has farms somewhere where it is
rearing chicken. Chi Foods also has farms where it is producing
concentrates, but the fact is that all these are not enough for their
production capacities.”
According to him, FrieslandCampina WAMCO
has gone into partnership with herdsmen in Plateau and other states to
train them on the type of cow that will produce the quality of milk the
company requires and is offering them financial support.
No comments:
Post a Comment