The Nation Newspaper

Tag: manufacturing

  • Sack fever grips workers in meter manufacturing firms

    Fear of job loss is rife among local meter manufacturing companies  following their inability to produce at optimal level, The Nation has learnt.

    It was gathered that the firms, which have been sidelined by the power distribution companies (DisCos) in procurement of the locally manufactured meters, are said to have commenced pruning of their workforce.

    It was further gathered that many of the firms have sacked hundreds of workers, due to what they described as the ‘low patronage’  recorded in the history of manufacturing of meters in the country.

    While many of the workers were asked to leave pending when the companies’ production and sales pick up, others were directed by their managements to work part-time.

    The Chief Executive Officer, MOMAS Nigeria Limited, a local meter manufacturing firm, Kola Abalogun, said many of the firms in the  electricity sector are in dire strait, due to problems such as poor funding, low patronage  and the government’s refusal to come to their aid through an effective policy that will induce demand of their products.

    Balogun lamented that the meter manufacturing firms are hard hit because they are  being negleted by the DisCos.

    He said many of the DisCos are not buying meters from the local manufacturers, despite the fact that they produce meters that can compete favorably with the ones imported from abroad.

    He said:  “For MOMAS, we have downsised. We have sacked some of our workers because there is no way we can continue to pay their salaries when a lot of meters are stocked in the store waiting endlessly for buyers.

    “We have told them that many of the workers would be recalled or more employed in the event that activity picks up again in the sub-sector. This is the situation on ground. I cannot speak for other manufacturers. But I believe that we are all having one challenge or the other. The major one is that many of the DisCos are not buying meters from us.”

    He said only one DisCo, or two buy meters from MOMAS, saying the issue of power supply remains a challenge as the firms cannot continue to run on generators and survive.

  • Skye Bank’s CEO advocates investment in manufacturing

    Skye Bank’s CEO advocates investment in manufacturing

    Group Managing Director/CEO of Skye Bank Plc, Timothy Oguntayo, has called for massive investment in the manufacturing, agriculture and extractive industries for the success of the diversification program of the government.

    He spoke during  a ‘Roundtable session on the Manufacturing outlook for 2016’ organised by the Dr. Biodun Adedipe led BAA Associates in Lagos.

    Oguntayo, who was Lead panelist at the roundtable; said he has identified three sectors that are critical to the success of the economic diversification agenda of the government in view of the dwindling oil prices, low GDP growth, and rising unemployment in the country.

    He said hitherto, the manufacturing sector contributed 10 per cent of Gross Domestic Product before the advent of oil boom of the 1970s, but lamented Nigeria’s overdependence on oil export and earnings from the 1990s to date.

    He said the over dependence on oil resulted in the neglect of the manufacturing sector; just as low investment in public goods and infrastructure led to the decline in manufacturing activities.

    To reverse the negative trend, he recommended the expansion of public infrastructure like road, electricity, among others to promote manufacturing. In addition, he advised manufacturers to access the earmarked N200 billion Central Bank of Nigeria and N200 billion Bank of Industry’s intervention funds to boost their operations.

    Noting that commercial banks were not structured to provide long term funding but bridge finance, he said the Bank of Industry and NEXIM Bank should be strengthened to provide long term funding for manufacturers.

  • Executive insights: Manufacturing, forex situation and the Nigerian economy

    The Nigerian Dream, if there ever were such a notion, is facing its greatest challenge in recent times. With a less than one-year-old government in place and an enormous task to ensure a fair economic and social justice system for all and a more equitable distribution of wealth and resources whilst combating corruption.

    A huge drop in crude prices, dwindling foreign Exchange (forex) reserves, continued import dependence, increased national and state debts amongst others, have led to a state of economic anarchy. Despite these economic headwinds, I believe the Nigerian people and government have been presented with a unique opportunity for us to re-evaluate ourselves – from our consumption habits to rent-seeking behaviour in line with current realities. Things may seem harsh at the moment, but nothing good comes easy. Led by a determined President Muhammadu Buhari, eliminating corruption, reducing wastage and checking leakages in the system at the government level has become a front burner issue. As a private investor, the current situation, whilst it presents huge challenges also comes with equally huge opportunities.

    There are key areas looking for investment in agriculture, manufacturing and infrastructural development, which I predict, will be the key drivers of Nigeria’s revival. Arguments have been put for and against the notion of devaluing the currency. But, is that really the issue? Does devaluing the currency without first creating the necessary conditions to stimulate local production suit our import dependent country at this time?

    Ultimately, private investors have to make genuine and  concerted effort to support the government’s effort, build capacity to develop local industries and give back to this economy rather than just looking for ways to exploit the system to the detriment of the many. These actions are not only crippling the economy but are also unpatriotic.

    I am however hopeful because our government is conscious of the fact that Nigerians are expecting a lot. They are ready, willing and in a position to help realise our potential. We have the human capital, land, natural resources, so it is just the will that we need. With good leadership, everything else will fall into place.

    We also have a president who is very anxious to ensure Nigerians get value for money without corruption and with the highest level of integrity. That one person makes all the difference. I am quite hopeful, confident, and optimistic that things definitely will improve for this country. We deserve that.

    The Foreign Exchange dragon rears its ugly head – again…

    It is disheartening to know that despite all the money that accrued to the government during the oil price boom in recent years, we find ourselves yet again in this position.

    To be quite frank, the current forex situation is bad. Even the Manufacturers Association of Nigeria (MAN) and other organised private sector operators have raised alarm over the unfavourable forex situation. There are lots of issues from regulatory to rent-seeking behaviour that need to be dealt with decisively. Whilst the Federal Government is doing everything to protect the naira, there are Nigerians – corporate and individuals alike, who are grossly undermining the government’s position – sometimes with the aid of regulators – knowingly or unknowingly. On one hand, the Central Bank of Nigeria (CBN) claims to be safeguarding the currency in line with the Federal Government’s resolve to protect the naira but on the other hand, the lack of a transparent exchange rate policy and inequitable distribution of foreign exchange to all players in key sectors meant to boost local production only worsens an already bad situation.

  • ‘Forex restriction catalyst for local manufacturing’

    The Central Bank of Nigeria (CBN) Foreign Exchange (forex) policy barring importers of certain items from accessing forex is a blessing in disguise, the Chief Executive Officer (CEO), Spectra Foods Ltd., Mr. Duro Kuteyi, has said.

    To him, it will serve as a catalyst to local manufacturers, especially Small and Medium Enterprises (SMEs),

    Kuteyi, who spoke with The Nation, described the policy as a right step in addressing unbridled importation, which is one of the major challenges facing local manufacturing. He said the policy was an affirmation of the Federal Government’s readiness to promote the backward integration policy of encouraging local sourcing of raw materials hitherto imported into the country.

    “It is good for manufacturers. In the past, Nigeria was a dumping ground for imports. The dumping will definitely reduce. Like someone importing apple using scarce foreign exchange to import apple when we have fruits wasting away,” Kuteyi said, pointing out that the policy was a major stimulant for local productivity.

    According to him, the policy is a shot in the arm of local manufacturers, especially SMEs. “The policy is good for manufacturers, particularly SMEs, because it is directed at reducing imported finished goods. “It’s an opportunity for SMEs’ capacity expansion, as they have the chance of enjoying higher patronage with less competition from finished imported goods,” he said.

    The industrialist said prior to the introduction of the policy, imported commodities dominated the manufacturing and industrial landscape, posing a serious threat to locally- manufactured products. He said local products suffered lack of patronage, and could not stand competition with foreign products, considering consumers’ penchant for foreign goods.

    Kuteyi lamented:“We SMEs in Nigeria produce and find it difficult to sell in the market. Some supermarkets don’t take our goods because they have the belief that they make more profit bringing imported materials to sell on their shelves. If they take products from SMEs, it is as if they are rendering a favour.

    “But when they import, they pay in advance and display on their shelves. They don’t encourage SMEs to thrive in Nigeria. And this has affected SMEs in Nigeria to the point that they cannot even expand.These are the things that the new policy will solve.”

    Kuteyi, however, said the policy will not affect those who are genuinely importing raw materials for their factories. “When you look at the genuine manufacturers, who depend on imported raw materials, these are the ones that should enjoy forex allocation. Like those who are into the making of laminated bags, rolls for manufacturers. These are packaging materials for manufacturers,” he said.

    While reiterating that the forex policy would encourage SMEs, he said there is need to address other challenges militating against SMEs’ productivity, particularly inadequate funding. According to him, many SME owners find it extremely difficult to raise capital for purchasing requisite machineries.

    The industrialist, who insisted that under-funding remained the bane of SMEs, said there is need to ensure that SMEs, who engage in manufacturing, get approval to import their machineries. According to him, about 60 per cent of SMEs depend solely on local raw materials that need not be imported and as such, should be supported to finance their businesses.

    “If you look at the SMEs, a lot of them cannot raise money to import raw materials, they buy the raw materials from importers. This is a special case that Federal Government should look at,” he said, adding that Bank of Industry (BoI) can make recommendation for those SMEs they have given money to or have bought machineries for that depend on raw materials so that their banks can assist them in getting forex for their raw materials.

    Kuteyi, however, said the forex restriction has resulted in increase in prices. “It is either it reduces our profit or we also increase our prices to meet up with what the difficulty in getting forex has caused. For example, there is a company making carton for us but because they could not get access to forex, they reduced their production meaning that they reduced their staff. So, this is also affecting an average manufacturer,” he added.

  • ‘Manufacturing is catalyst for progress’

    ‘Manufacturing is catalyst for progress’

    How manufacturing can be harnessed for the nation’s socio-economic progress was the focus of discussion at the 89th National Executive Council meeting of the University of Nigeria, Nsukka (UNN) alumni association  in Nnewi, Anambra State, last week.

    Presenting a paper titled: Manufacturing industries key to socio-economic revival and restoration of the dignity of man, Dr Udunna Nwafor-Orizu, an alumni, said a nation would witness genuine development if it harnessed its manufacturing industries to provide jobs for the citizens.

    She listed Japan, Singapore, Malaysia, China and United States, among others, as nations where manufacturing turned around people’s fortunes and engender rapid growth. She added that the role of manufacturing in national development could not be effectively told without highlighting the actions of the late former Prime Minister of Singapore, Lee Kuan Yew.

    Nwafor-Orizu said: “Yew’s solution for the challenges Singapore faced years back was a policy of transforming the country from a trading hub into a production center through the development of industrial cities. He promised tax relief to industries and he introduced measures to protect manufacturing tariffs.”

    By copying the model, Nwafor-Orizu was optimistic that Nigeria could become an economic giant. She described Nnewi as the largest spare parts market in West Africa and a potential manufacturing city, given the rate of industrialisation in the commercial city.

    She said: “In the last decade, Nnewi has experienced relatively rapid industrialisation. Since 1970, Nnewi residents have controlled approximately 80 to 90 per cent trade of motor parts in Nigeria. Policymakers can take Nnewi as a good example to what a nation can achieve if the manufacturing of the motor part are done locally. When raw materials are not imported, the country grows stronger.”

    On the benefits that could be derived from manufacturing, Dr Nwafor-Orizu said employment opportunities would be created for the youths, while reduce crime rate would drop and standard of living improve.

    She identified poor penetration of the local markets as one of the challenges facing manufacturing industries in the country, noting that many industries were dying because of unhealthy rivalry in importation, epileptic power supply, low patronage from government and poor funding.

    She advised government to initiate policies that would protect and encourage the local industries, and provide enabling environment for production by improving power supply and loans to support their businesses.

    The National President of the association, Chief Andrew Oru, said the choice of the city of Nnewi for the event was in line with the theme of the meeting. He described the Nwafor-Orizu’s lecture as incisive, urging the policymakers to implement the lecturer’s recommendations.

    Highpoint of the event was presentation of awards to distinguished alumnus and award of prizes to the best students in the quiz competition organised by the association for pupils.

     

  • Daikin Industries assures local manufacturing of air conditioners

    Daikin’s President, Middle East & Africa, Daikin Industries Limited, Mr Sano Ryoji, has said Nigeria is the most important market to its air conditioners brand in Africa.

    Speaking in Lagos, the firm’s chief said because of this, the company would soon start the manufacturing of the Japanese brand in Nigeria, adding that it might take off with the completely knockdown units (CKU).

    Ryoji said: “Nigeria’s energy consumption is central in the choice of an air conditioner. Closely related to the inverter advantage, is that Daikin air conditioners have built -in protection against unstable power supply and blackout. This eliminates the need for an AVS device or stabiliser. The built-in voltage protection makes it possible for Daikin to operate as low as 198V and as high as 264V, without compromising cooling comfort. (The standard voltage operating range is 220V-240V)

    The firm’s Middle East and Africa Regional Director, Mohammed Miraj Abass, said: “Outdoor air has many atmospheric and corrosive pollutants, such as dust, humidity, and rain, that damage the heat exchanger coils of air conditioners. To guard against damage to the heat exchanger coils, Daikin uses as standard, blue fin protection on the heat exchanger, with high anti-corrosion properties. This ensures optimal cooling performance in any location.’’

     

     

    On why the company’s air conditioners are better, Abass said: “The heart of any air conditioner is the compressor. Daikin air conditioners come with highly durable compressors with operating range up to 54 degrees centigrade ambient. The combination of highly resilient compressor and blue fin protection, means the cooling performance remains intact irrespective of the operating environment.”

    The brand, Abass said, takes indoor comfort seriously. Superior indoor air quality is guaranteed through the combination of filtration and mould proof operation, he said, adding that their customers should not be disturbed if they noticed the indoor unit fan still working after the unit has been switched off. “This is necessary for the unit to dry any residual condensation to avoid mould formation and subsequent odour,’’ he said.  He listed other features of the product to include turbo mode, and sleep mode.

    Daikin’s after-sales are provided by Panaserv Nigeria Limited, which has centres in major cities.

     

  • MAN prays Buhari for policies to grow manufacturing sector

    The Chairman, Ikeja Branch, Manufacturers Association of Nigeria, (MAN), Prince Felix Oba Okoje, has said the manufacturing sector will  flourish if there are good policies, to support manufacturing.

    He therefore urged President Muhammadu Buhari to put long-term policies in place, adding that manufacturing cannot thrive with short term planning. “Manufacturing should be at the forefront of the economy, with a consistent, tested and lasting policy. Until we learn to do that, the sector and the economy will remain as it is now,” he said.

    Okoje said the problems facing the manufacturing sector in the country go beyond power supply. According to him, the situation in the sector has become so critical because of the harsh operating environment. Therefore, he said, operators in the sector now have to come up with good initiative to be creative and also to study the intricacies of market via the intuition of supply and demand.

    He identified the industry’s challenges to include double digit interest rate, rising cost of foreign exchange as the naira continue to depreciate against major currencies of the world, among others.

    Okoje regrets that the unpalatable experience of the sector in the area of electricity supply is now panning out in that of gas supply to the sector. This, he explained, is because the gas suppliers or the franchise owners, at the moment have the absolute monopoly.

    To ameliorate the sufferings, the former President Goodluck Jonathan, in 2010, was said to have set up a committee to deliberate on a national gas plan. This plan, Okoje believed, would have brought about the diversification of gas supplies and other associated issues by putting infrastructure in place. However, the outcome of the committee’s deliberations cumulated into a national gas price which was a little bit higher than any other price that existed around that time. Under the arrangement, he said each year, there would be some percentage increase, such that at the end of last year, manufacturers were paying between N38 and N40; a price regime he said was reluctantly accepted because it was meant to be used for four years. Today, manufacturers are being asked to pay N50 and N60 per cubit of gas, he lamented.

    He asked rhetorically: “How can we pay that? Why do they want to price Nigerian manufacturers out of market? Where is that done?”

     

  • Manufacturing down by 3.8% over forex restrictions, fuel shortages

    The manufacturing sector, which accounts for 10 percent of the Gross Domestic Product (GDP), declined for a second consecutive quarter by 3.8 per cent in the second quarter of this year.

    The performance is against a growth of 14 per cent yearly in the last one year, a report by Renaissance Capital (RenCap), an investment and research firm, has said.

    In the report entitled: Second Quarter 2015  GDP: “Manufacturing is in recession,” RenCap’s Sub-Saharan Africa economist Yvonne Mhango said manufacturing’s decline in the first quarter of the year is partly because of tight forex liquidity, which made it difficult for manufacturers to acquire imported inputs. It is also likely that severe fuel shortages in the second quarter undermined production and distribution, she said.

    She said the decline in the manufacturing sector came after the double-digit growth from 2011 to 2014. The decline is largely attributed to the largest manufacturing sub-sector, food, beverages and tobacco, which contracted by 5.9 per cent in growth of 5.2 per cent in June 2014.

    She said the textiles sub-sector has also seen two successive quarters of negative growth.“We believe manufacturing’s decline in March 2015 is partly because of tight forex liquidity, which makes it difficult for manufacturers to acquire imported inputs. It is also likely that severe fuel shortages in June 2015 undermined production and distribution,” she said.

    RenCap has, therefore, revised down its 2015 growth forecast for Nigeria to 2.8 per cent (from 3.4 per cent) following this week’s release of exceptionally weak growth data from Nigeria and South Africa.

    “As they account for half of Sub-Saharan Africa’s (SSA’s) GDP, their softer growth has significant implications for the region; we now see SSA growth slowing to 3.5 per cent in the year against a 2000 to 2014 average of 5.5 per cent per year.

    For the non-oil sector, the sharp slowdown in growth to 2.4 per cent  in the second quarter, against 6.5 per cent same period of last year, was largely owing to a deceleration in the non-oil sector rather than a continued contraction in the oil sector.

    To put things in context, the oil sector’s contraction was equivalent to that in 2014, but in the first quarter, GDP growth was still higher than six per cent. This underscores the fact that the second quarter slowdown was mainly owing to the non-oil sector, which grew at 3.5 per cent against 6.7 per cent in June, last year. A decline in manufacturing and a slowdown in services explain the non-oil sector’s lacklustre performance.

    “We revise down our 2015 growth forecast to 2.8 per cent because of June 2015 growth of 3.1 per cent came in below our 2015 forecast of 3.4 per cent; and  we expect supply constraints, related to forex restrictions and the de facto import ban, to undermine growth in June 2015,” she said.

    Defending the forex policy, CBN Director, Monetary Policy, Moses Tule, said allowing access to forex would sink the economy because oil price decline has reduced the volume of government dollar earnings.

    Tule, who spoke at the Private Sector Dialogue with the CBN on forex policy organised by Lagos Chamber of Commerce and Industry (LCCI) in Lagos, accused some manufacturers and real sector operators of insincerity in their forex request.

    He said some manufacturers obtained forex from the CBN at official rate, sent the fund abroad without the intension of importing goods and that such funds were never repatriated.

    Also, he faulted the practice of manufacturers making upfront forex demand, sometimes with over two years’ gap. “Some importers demand for forex for items they want to buy in the next two years,” he said.

    Tule said micro-economic management in Nigeria needs the support of stakeholders to achieve the desired success. He said no economy is run by forex, and that it is the level of economic activities in the country that determines its volume of dollar-earningsy.

    He said before the fall in oil prices, the apex bank did its best to ensure that everyone that needed forex got it.

     

  • Practitioners advised on manufacturing standards

    Practitioners advised on manufacturing standards

    • NAFDAC lists criteria for herbal drugs production

    The National Agency for Food and Drug Administration and Control (NAFDAC) has urged the National Association of Nigerian Traditional Medicine Practitioners (NANTMP) to reconstruct its herbal hall to meet manufacturing practice standards.

    Its Director-General, Dr Paul Orhii, said it was a prerequisite for the association to be allowed  to produce  herbal drugs at the site.

    Orhii, who was represented by the principal regulatory officer, Mr Joseph Okereke, at a special inspection of the facility, built in 1982 by NANTMP pioneer chairman, Lagos State branch, the late Dr Joseph Lambo, said the factory must have a structural flow – from changing room to production room and packaging room.

    The association, he said, can only produce powdery and solid herbal drugs at the facility as it is not equiped for liquid drugs or syrups.

    “There is also space constraint and lack of hi-tech equipment.  NANTMP may find it difficult to meet those conditions at the moment,” he said.

    Besides, there is the need for water purification plant and stainless machine for mixing compounds to avoid residue, Orhii said .

    The agency, he assured, will collaborate with the association to develop the sector but, “our job is to ensure that the centre conforms to the standards for having a manufacturing plant”.

    NANTMP Chairman Dr Yekini Akande said the quest to have a common production site for herbal drugs could not be over-emphasised.

    Akande said production of herbal drugs at the facility would help poor members to produce their drugs at a cheaper rate.

    The herbal hall, Akande said, has been unused since the demise of its founder, adding that people with no affiliation to the association have been using it for other purposes.

    He said the facility was being rehabilitated to meet NAFDAC standards for production sites, stressing that it would be ready for use.

    “NAFDAC’s visit is an eye opener to help us focus on the areas to touch to make our dream of having a common production site a reality,” Akande said.

    Akande urged the Federal Government to hasten the passage of traditional medicine bill so that the practice can progress to the desire height.

    “We are appealing to the government to come to our aid so that we can develop traditional medicine to the level of China and India,” Akande said.

  • Gov Ayade attracts tractor manufacturing plant to C/River

    Gov Ayade attracts tractor manufacturing plant to C/River

    • Plans to build 5000 homes for poor, unemployed

    Cross River State Governor, Senator Ben Ayade’s trade mission to the Republic of Ireland has already begun to yield fruits, with a tractor manufacturing company expressing the willingness to set up plant in the state.

    Ayade, who spent the first day of his visit between Dublin and Monaghan listening to presentations from various Irish investors and businesses, was particularly excited by the presentation from the Affordable Building Concepts Limited chairman, Redmond Cullinane.

    Cullinane informed the governor and his entourage, including Nigeria’s Ambassador to Ireland and Iceland‎, H.E Bolere Ketebu, that his firm can build a home in just one day and half.

    The system used in constructing the homes, which he calls off site, is expected to “increase ten-fold in 2020, with this type of system making up over 50 percent of the current construction.”

    He said the system is the quickest way of fulfilling modern housing needs at a more competitive cost ‎which still ensures good and modern building standards.

    The governor revealed that his administration would adopt the system to build 5000 homes for the poor and unemployed.

    Catering for this class of people, according to him, was the most compelling reason why he is in public office, adding that the focal point of his administration in on how to lift as many Cross Riverians as possible out of poverty.

    He later inspected prototypes of the homes at the company’s warehouse in Monaghan.

    The governor, however, demanded that given the number of homes his government is willing to build, the firm should consider sitting its manufacturing plant in the state.

    The governor also announced that the state was willing and ready to partner with an Irish Dairy to establish an Ice cream making factory in the state.

    He disclosed that his administration has already agreed in principle with Cavenco of Spain to establish a Dairy Farm, which he believes will revitalize the moribund cattle farm at the Obudu Ranch Resort.

    At the Nigerian Embassy in Dublin where he listened to a presentation by the Atlantic Flight Training Academy, the governor declared that the state would send some of its young graduates to the institute for Aviation training with the long term prospect of building an airport in between Ogoja and Yala.