Raw Materials Import Declines By 22.36% To N1.88trn – NBS

Manufacturers spent N1.88tn on raw materials import in nine months, foreign trade reports of the National Bureau of Statistics (NBS) have shown.

The Q1-Q3 foreign trade reports indicated that manufacturers imported raw materials worth N1.88 bn between January and September 2022, a 22.36 per cent decline from the N2.43bn they spent in the corresponding period in the previous year.

The dipped was on the back of forex scarcity in the country which has made many firms source their raw materials locally and those who could not get their inputs in the country had to stop production.

Some manufacturers who spoke with Economic Confidential lamented the difficulty in accessing foreign exchange at the parallel market due to Central Bank’s refusal to allocate forex to bureau de change operators.

They claimed may be forced out of business by the current difficulty they grappling with sourcing raw materials.

The Chief Executive Officer of Coleman Technical Industries, George Onafowokan, said the weakness of the naira, particularly in the parallel market, where a majority of manufacturers source foreign exchange, has greatly disrupted production activities.

Onafowokan expressed optimism that the price hikes which followed the naira’s devaluation would fizzle out if the currency maintained its current momentum.

He said, “The volatility which caused a 36 per cent 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 said manufacturers were dealing with the dictates of the black market, which was not healthy for the economy.

“Whether you are buying raw materials or machinery, you are still dependent on the black market, unfortunately,” he said.

A manufacturer of chemicals and Chief Executive Officer of MD Company Limited, Ike Ibeabuchi, said he was experiencing severe raw materials shortages owing to the forex scarcity.

“My raw materials were depleted two months ago, but I have not been able to restock them because I cannot find dollars. Also, the dollar rate is also making it almost impossible for many of us to continue in the manufacturing business,” he said.

The Chief Executive Officer of Kenfrancis Farms, Ifeanyi Okereke, told The Punch that his company had shut down due to the foreign exchange crisis bedevilling the industrial sector.

He said, “We started in 2016 believing in Nigeria and hoping that we could process agro products and export them, but getting raw materials to carry out this objective became a problem. Our cost of production skyrocketed and, at a point, it became clearly impossible to continue operations. We suffered severe shortages before we closed down,” he said.

However, the immediate past Chairman of the Nigerian Association of Small-Scale Industrialists, Segun Kuti-George, described the recent rebound of the naira as a welcome development.

“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 per cent 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.

However, Kuti-George noted that the new development was being taken with a pinch of salt.

He also claimed that the dollar was not available to manufacturers because of scarcity, adding that the situation would get worse in the new year due to the new directive by CBN for banks to source forex on their own.