Companies, not just in Nigeria, have always been challenged, over the years, by a culmination of problems.
These problems range from high cost of energy generation, multiplicity of taxes, influx of substandard products and the recent twin economic policies of exchange rate unification and fuel subsidy removal.
It is also not news that manufacturing companies in Nigeria have in their operations laid off staff to remain profitable or shut down completely due to a myriad of problems.
According to Mr Femi Egbesola, President, Association of Small Business Owners of Nigeria (ASBON), over seven million small businesses have died within the last two years.
Also, many large corporations, including Nigerian Breweries Plc, Guinness Nigeria, Dangote kCement, Airtel Nigeria, MTN, Lafarge Plc and Cadbury Nigeria Plc, declared losses running into billions for the first half of 2023.
Most recently is the exit of GlaxoSmithKline Nigeria (GSK) from Nigeria after 51 years of delivering wholesome pharmaceutical services to the nation.
Nigeria, an import dependent nation, has expended some efforts to diversify its economic earnings from oil to non-oil components such as agriculture, manufacturing, pharmaceutical, mining, financial services, amongst others.
However, there is the need for an excellent and a business friendly environment for such diversification to thrive; which may have become hampered by recent economic developments.
Dr Muda Yusuf, founder, Centre for the Promotion of Private Enterprises (CPPE), said that the last few years had been very challenging for businesses in the Nigerian terrain.
He noted that in the case of GSK, the company had been scaling down its operations over the years with many of their products and facilities franchised to other companies.
Yusuf said that for many multinational corporations, exchange rate stability remain a very critical component of their operations to facilitate the sourcing of materials for production.
He added that the country’s operating environment had become very competitive, particularly with the involvement of some Asian companies.
The CPPE boss further said that structural problems such as constant power supply for production, bottlenecks at the ports have existed for years, making it very difficult for indigenous manufacturing to flourish.
“On the way forward, we understand that the current administration is a new government and some of the reforms have created some short term challenges for these businesses. However, they are necessary to put the economy on the right path.
“Government has pledged to intervene and may not leave the entire foreign exchange thing to market forces.
“There are hints that government may intervene in the foreign exchange market to stop the free fall in the currency and the results may take some months to manifest.
“However, the palliatives that government has promised should be speedy implemented.
“All the interventions they listed in the areas of agriculture, transportation, manufacturing, small businesses once implemented would be largely reduced,” he said.
Yusuf said that for immediate impact, government should work toward providing tax relief and fiscal policy incentives such as reduction of import duties for critical manufacturing components for companies.
He said government must ensure a deliberate implementation of the Executive Order 003 and mandate that all stationaries, office consumables, furnitures, vehicles and pharmaceutical products must be supplied by indigenous manufacturing companies.
“Government must insist that those things are supplied by local manufacturers and continue to provide concessionary credits for small businesses to yield quick results.
“More efforts should be expended to tackle oil theft to see improvement in foreign exchange earnings which would help the country’s external reserves and stabilize the exchange rate.
“The moment that is stabilised, more inflow of foreign exchange would come in through autonomous forces to help stabilise the markets,” he said.
Mr Segun Ajayi-Kadir, Director-General, Manufacturers Association of Nigeria (MAN), said the North-East where 60 per cent of its member companies had closed down is in dire need of a special policy initiative to address the revival of closed and distressed industries.
He said sequel to the unification of the exchange rate, the Central Bank of Nigeria (CBN) should be prevailed upon to give priority to the allocation of foreign exchange to the productive sector.
This, Ajayi-Kadir said, is critical, particularly to manufacturers to import raw materials, spares and machinery that are not locally available.
He also emphasised the need to direct the National Electricity Regulatory Commission
(NERC) to admit all qualified applicant companies into the Eligible Customer Scheme to allow them access power as stipulated in the Electric Power Sector Reform Act 2005.
The MAN DG said all all relevant agencies of government must ensure that the electronic call-up system at the ports aimed at addressing congestion works without failure.
“It is important for government to craft and announce a special policy initiative to leverage diaspora expertise and investment to address evident gaps and help to boost the performance of the economy.
“Government must also direct all ministries, departments and agencies of government to unfailingly comply with Executive Order 003 on patronage of made in Nigeria products.
“In this regard, there should be strict application of the margin of preference, effective monitoring and periodic evaluation of compliance and appropriate sanctions meted out to MDAs acting in breach of the executive order,” he said.
Buttressing, President, Lagos Chamber of Commerce and Industry (LCCI), Dr Michael Olawale-Cole, said to reduce the shocks from global disruptions, manufacturers must be assisted with subsidised input and more allocation of foreign exchange for the importation of critical inputs.
Olawale-Cole said there must be a continuous improvement of electricity supply and that all issues on distribution companies profitability must be addressed.
He noted that the outlook for the oil and gas sector in the third quarter appeared positive due to the resolution of some maintenance issues and partial recovery.
This, he said, means that production levels were expected to continue recovery though with a high risk of reversal due to insecurity, theft, vandalism, force majeure events, and lack of payment discipline.
The LCCI President urged government to share in the sacrifices made by Nigerians and Nigerian businesses by reducing the high cost of governance in all its tiers and ensuring fiscal leakages and corruption are strategically dealt with.
According to him, this will demonstrate to Nigerians that the leaders share in the suffering and sacrifice of the people.
“The perks available to public office holders are so enormous that it is difficult for the average Nigerian to understand why they suffer so much and those in leadership are unaffected.
“The issue of oil theft must not be sidelined at this stage as it has critical implications for the rule of law and our economic well-being as a nation.
“Government should also track down and apprehend the culprits of oil theft as this will act as a deterrent and communicate powerfully that crime must be punished,” he said. (NANFeatures)