The specter of Boko Haram is haunting the manufacturing industry. From billions of dollars in financial losses by manufacturers to monumental decline in Foreign Direct Investment (FDI), loss of jobs and social dislocation, the upsurge in the bombing campaign of the militant Islamist group has left manufacturers, and by extension, the economy, gasping for breath. Assist Editor CHIKODI OKEREOCHA reports that unless President Muhammadu Buhari makes good his promise to contain the group, more manufacturers, especially those in the Northeast, may become extinct.
It would probably go down as the most challenging period in it’s over 50 year’s operation in Nigeria. Between November last year and April this year, a period of six months,Lafarge Africa incurred financial losses to the tune of N2.5 billion as a result of the Boko Haram insurgency in the Northeast. The company, which recently merged with Switzerland–based Holcimto create the most advanced building materials group, incured the heavy losses because it could not meet its sales projections due to the insecurity in the region..
Although, normalcy has since returned to the company’s operations, according to itsGroup Managing Director/CEO, Guillaume Roux, the N2.5 billion financial losses is not the company’s only worry.
Lafarge Africa is also worried about the threat Boko Haram poses on it’s over $100 billion business expansion drive, particularly in the northern region.
Roux said: “Today we have up to 8.5 million tonnes in the country and we want to double that capacity in the next five years. We are expanding in Calabar and we want to expand in the north. So this project of $100 billion expansion in the north is key because there’s a market; its key because there’s growth and it’s been an essential project for us.”
Roux, who spoke in Abuja shortly after a meeting with the Presidential Initiative on the North East (PINE) held to finalise discussions on the role the cement company will play in the long term economic development of the Northeast, said supporting the security, recovery and stability of the region had become critical to the future of its over $100 billion business expansion drive in the region.
According to him, the assets and plants the company has in the north are very strong and competitive. “We want to make sure the right conditions are there. Security is essential-without security obviously we cannot invest. The economic development is essential, so we need to help,” he said.
Roux further said the company had demonstrated its commitment to business expansion in the region through the ground breaking of an expansion project that was meant to grow Ashakacem capacity from the current one million metric tonnes to four million metric tonnes.
His words: “Lafarge is a long term investor and this necessitates uninterrupted operations despite the insurgency that we have witnessed in recent times. Of course, we see security as a key ingredient for our continued oper ations and this is why we are a willing ally with PINE in restoring normalcy and rebuilding the region.”
Incidentally, Lafarge Africa is only an addition to the long list of manufacturing firms in Nigeria desperately craving uninterrupted operations and is ready to give an arm literarily for the restoration of normalcy in the devastated region.Boko Haram’s insurgency is also taking a huge toll on Spectra Industries Limited, makers of Suco beverages.
Its Managing Director, Mr. Duro Kuteyi, told The Nation that because his company’s distributors are in the Northeast and Northcentral – the epicenter of the sect’s activities – the fortunes of his company have dwindled.
Kuteyi who is also the National Vice Chairman of Nigeria Association of Small Scale Industrialists (NASSI), lamented: “Our core business is in the North, and our distributors complain of low sales as people are scared of visiting the markets or big malls; customers take their time to shop because of bomb scare.”
Customers, he said, are skeptical about the safety of doing business or even doing their personal shopping, so the situation has affected his company’s profitability. “The security situation, especially the bombings and kidnappings are affecting our business,” he said, adding that as a result the distribution of locally manufactured goods has been hampered.
For manufacturers, it does not only rain, it pours.The protracted armed insurrection in the country has ruined their businesses, and by extension, the national economy. Real sector operators especially manufacturers including members of the Organised Private Sector (OPS) are agonising over the implications of the continuous erosion of investor’ confidence on the economy as a result of the sustained bombing campaigns of the militant group.
President, Lagos Chamber of Commerce and Industry (LCCI), Alhaji Remi Bello, is one of those who are worried.
Bello said at moment, itis extremely difficult to attract investors because the risk of long-term investments had become enormous. Hear him: “The tempo of economic activities in the North has declined; access to markets by companies in the south has reduced, resulting in loss of sales; while many enterprises have relocated.” While noting that security of lives and property is crucial to investment, he said investment growth is imperative for job creation, poverty reduction and social stability. Besides, persistent insecurity, he stated, impacts negatively on the economy, while declining private sector performance result in job losses, which in turn aggravate the state of insecurity.
For real sector operators and indeed, government, the dry up of Foreign Direct Investment (FDI) due to rising insurgency is a bitter pill to swallow. Since 2009 when the group emerged, FDI has been dropping sharply, sending shock waves down the spine of the authorities particularly since last year when declining price of oil in the international market caused serious fiscal upsets for Africa’s largest economy. For instance, the World Investment Report (WIR) 2013 says FDI flows into Nigeria dropped by 21 per cent in just one year — from $8.9 billion in 2011 to $7 billion in 2012. This translates to loss of $1.9 billion, a figure considered unacceptable for a country in dire need of shoring up its revenue.
The drop in FDI, The Nation learnt, is not unconnected with the serious negative perception problem created for the country by the activities of the insurgents. The perception problem is said to be responsible for the dwindling fortunes of operators in the hospitality industry. Many branches of banks and insurance companies have also closed shop, even as sales representatives of many companies have fled the affected states in the north. Also, many company projects under construction in the North have either been abandoned or suspended. Many operators, especially Small and Medium Enterprises (SMEs) have also relocating to other states thus, putting more pressure on limited facilities in those states.
Because many companies have relocated their employees to areas considered less volatile, while many Nigerians moved en-mass to states not impacted by the violence, a humanitarian crisis of unimaginable dimension has since set in. Many families resident in the South where fleeing victims of Boko Haram take refuge have had to contend with feeding more mouths than their income could carry. The unemployment rate in those states in the south also soared. The rush to escape from the northern part of the country that has been hard hit is already affecting the profitability of businesses in the region due to decrease of economic activities.
A disturbing aspect of the humanitarian crisis now starring the country in the face as a result of the upsurge in the activities of the sect is the plight of Internally Displaced Persons (IDPs) Last year alone, about 16 million people, many of them children, were displaced, according to fugues from Federal Ministry of Special Duties and Intergovernmental Affairs. Yet, Permanent Secretary in the Ministry, Dr. Jamila Shu’ara, at an event marking this year’s World Refugee Day in Abuja, this week, raised the alarm that the figure might triple this year if urgent steps were not taken to stop insurgency.
With about 47,000 persons displaced daily, Shu’ara said: “The issue of refugees and displaced persons has become a major concern globally because of the negative effects on humanity.” She however, said her office was collaborating with the United Nations High Commission for Refugees (UNHCR) and other stakeholders to provide succour for refugees and IDPs.
“We all have a moral obligation and responsibility to lend a helping hand to people who want to flee as a result of conflict. The government is firmly committed to these principles while also seeking lasting and durable solutions to the challenge,” the Federal Commissioner for Refugees in the National Commission for Refugees, Migrants and IDPs, Hadiza Kangiwa Sani, said, adding that because of the security challenge in the Northeast, hundreds of Nigerians now prefer to seek asylum in neighbouring countries.
While calls for all hands to be on deck in seeking lasting solutions to the challenge of IDPs intensify, manufacturers, widely acknowledged as catalysts for economic growth and development, are also seeking relief. Recently, Manufacturers Association of Nigeria (MAN), the apex manufacturing body in Nigeria, called on President Muhammadu Buhari to address all the issues agitating the minds of manufacturers especially the Boko Haram insurgency.
Although, since his inauguration on May 29, Buhari had at various fora reiterated his administration’s commitment to halting the violent campaign of Boko Haram, the consensus of experts and operators in various sector is that government must work the talk to halt the most callous and violent radical Islamist groups in African history. This, they say has become necessary because the manufacturing sector in particular remains crucial to national development, given its potential for job creation, revenue generation, and contribution to national Gross Domestic Product (GDP).
