ONCE upon a time, a manufacturing company stood in the heart of Nnewi, the industrial hub of the south-eastern state of Anambra, Nigeria.

The company, known as Louis Carter Industries, produced plastic gallons, basins and other plastic products.

Customers visited Nnewi from different parts of Nigeria to buy these products. A lucrative company with tens of thousands customers, it had over 40 members of staff in different production lines.

In 2016, however, one year after President Muhammadu Buhari came to power, the compan, established in 1989, began to wobble. There was suddenly a foreign exchange (FX) crunch due to declining oil prices, and many manufacturers could not have access to dollars with which to import their raw materials.

In 2016, manufacturers imported 48 per cent of their raw materials using mostly dollars, according to the Manufacturers Association of Nigeria (MAN).

Financial analysts had expected the Central Bank of Nigeria (CBN) to float the FX market to boost dollar supplies, but the bank adopted exchange control measures by restricting access to domiciliary accounts and barring 41 items from having access to the official FX market.

Incidentally, one of the items excluded from the official FX market was polypropylene, which is commonly used for plastic mouldings.

By excluding the items from the official FX market, manufacturers could only import them using foreign exchange sourced from black or parallel markets.

In 2016 when the FX crunch began, one dollar exchanged for N197-N199 at the official market, but the black market rate was up to N20 to N40 higher. By sourcing the FX at the black market, several firms saw their production costs surge, according to the then President of MAN Frank Jacobs.

The exchange control happened with the support of President Muhammadu Buhari.

Even for items not restricted, it was difficult for manufacturers to get FX to import them.

Louis Carter struggled silently to access foreign exchange to import polyethene, ethylene, vinyl and chloride – other major raw materials for the production of plastics.

But that was not the only challenge. Energy cost was rising because the company was using alternative electricity sources due to the insufficient electricity supply to Nnewi by the Enugu Electricity Distribution Company (EEDC).

In 2016, manufacturers spent N129.95 billion on alternative energy sources as against N58.82 billion in 2015, MAN said.

Due to a ballooning production cost, Louis Carter could no longer survive and was forced to shut down in 2017, with the staff rejoining an already crowded labour market.

“We had a major challenge with energy costs,” General Manager of Louis Carter Industries Ndubuisi Okoli told The ICIR with some air of bitterness.

“The EEDC was not giving us power. Also, we had issues with getting raw materials for production,” said Okoli.

A report in the Journal of Health and Pollution said about 14.2 million tons (nearly 510,000 20-foot containers) of plastics in primary form were imported into Nigeria between 1996 and 2014.

The ICIR’s investigation shows that many manufacturing companies are dying silently, and they blame their demise on President Buhari’s administration policies.

It took the reporter more than one month to find some of these companies and interview their former officials or those close to them, where possible.

Because the closures of the manufacturing companies are not always reported, government officials do not take notice or pretend not to.

Moak Enterprises was once one of the biggest bottled/sachet water companies in Sango-Ota, an industrial zone in Ogun State, South-West Nigeria. A producer of ‘Meridian Waters,’ the products were consumed by the young and the old. An ultramodern company, Moak produced several trucks of sachet water each month and supplied to wholesalers and retailers in Ogun State and beyond.

According to The ICIR‘s findings, the company broke even in 2014 -one year after its establishment. But seven years after, it was under lock and key.

“I struggled till July this year (2021) before I shut down the company,” Chief Executive Officer Olatunde Akintunde told The ICIR.

“The reason is that we could not buy raw materials again due to naira devaluation. We used to buy pre-forms ( used in forming sliced fibre threads) at N400,000 three to four years ago, but the price has risen four-fold to N1.6 million,” he said.

“The production cost is very high, and customers are not buying as we transfer these costs to them.

“Since 2015, when the present government came in, our company has been struggling due to bad policies.”

The story of Procter and Gamble (P&G) is hard to forget. Unlike the other two, the shut-down of P&G was reported by the media, though many of the reports did not provide clarity as to why the firm closed its production segment.

READ MORE HERE: https://www.icirnigeria.org/under-buhari-nigerias-giant-industries-are-silently-disappearing-1/