Raw materials import drops by 22.36% to N1.88tn

According to the National Bureau of Statistics’ international trade records, manufacturers imported N1.88 trillion worth of raw materials in the last nine months.

Manufacturers imported raw materials totaling N1.88 billion between January and September 2022, according to the Q1-Q3 foreign trade reports, a 22.36 percent decrease from the N2.43 billion they spent over the same time period in the previous year.

The decline was caused by the country’s lack of foreign exchange, which forced many businesses to source their raw materials domestically. Businesses that were unable to obtain their inputs locally were forced to halt operations.

Due to the Central Bank’s refusal to distribute foreign currency to bureau de change operators, some manufacturers bemoaned the difficulty in obtaining foreign exchange on the black market. They asserted that their present struggles to locate raw supplies may put them out of business.

George Onafowokan, the chief executive officer of Coleman Technical Industries, claimed that manufacturing activities have been severely affected by the naira’s depreciation, particularly in the parallel market, where the bulk of businesses obtains foreign money.

Onafowokan expressed confidence that if the naira continued its current trajectory, the price increases that accompanied the devaluation would subside.

He said, “The volatility which caused a 36 percent increase in one week or so was not to anybody’s benefit. It distorted the markets. Manufacturers kept repositioning, and eventually, the whole manufacturing sector almost went into comatose. Some companies had to stop selling and production, because there was no way they could replace their stock.”

He claimed that manufacturers were subject to the demands of the underground market, which was bad for the economy. You are still reliant on the illegal market, he lamented, whether you’re purchasing machinery or raw supplies.

Chemical manufacturer and CEO of MD Company Limited, Ike Ibeabuchi, reported having serious raw material shortages as a result of the dearth of foreign currency.

“Two months ago, my raw materials ran out, but I haven’t been able to replenish them because I can’t locate any money. Additionally, the dollar exchange rate is making it very hard for many of us to stay in the manufacturing industry, he added.

Ifeanyi Okereke, the chief executive officer of Kenfrancis Farms, told The Punch that his company had shut down as a result of the industrial sector’s ongoing foreign exchange problem.

He explained, “We began in 2016 trusting in Nigeria and hoping that we could process agricultural products and export them, but obtaining raw materials to achieve this goal proved difficult. Our production costs soared to the point that it was obviously untenable to carry on with business as usual. Before we closed down, we experienced acute shortages, he claimed.

However, Segun Kuti-George, the recently-retired chairman of the Nigerian Association of Small-Scale Industrialists, hailed the recent recovery of the naira as a positive step.

“The appreciation of the naira is a welcome development. This is the kind of thing that will help businesses to grow as it would reduce the cost of importation because we import most of our materials. 70 to 80 percent of the raw materials we use in Nigeria are imported. So, the price will come down and people will make more money and when they do, they will generate more profit and create employment,” he said.

Kuti-George cautioned that the new development should be viewed cautiously. Additionally, he asserted that manufacturers could not obtain dollars owing to a shortage, and added that the issue will worsen in the coming year as a result of the CBN’s new rule requiring banks to source foreign currency on their own.

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Source: punchng.com