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More factories close up as economic recession takes toll on sector

More factories close up as economic recession takes toll on sector

The much feared economic recession has started taking its tolls on the manufacturing sector in Nigeria with some medium sized firms already on the verge of systemic lay-off of their work force.

 

This is in line with what the Manufacturers Association of Nigeria (MAN) had earlier said the recession in the country would result to, if not tackled in good time.

 

As at end of September, MAN said more than 25 per cent of its members were about closing shops, which will see to more than 2.5 million technical staff out of jobs.

 

Already a Lagos-based food manufacturing firm, Erisco Foods Limited, confirmed that it has relived about 1,500 of its workers of duties as it has temporarily short down its $200 million plant, pending improvement on the economic crisis.

 

Confirming this on Wednesday, the company’s chief executive officer, Chief Eric Umeofia, attributed scarcity of foreign exchange to the action.

 

He lamented that the dream of attracting estimated $100 million investment into the country through his firm had been put on hold.

 

But the decision to shut down the firm was protested against by the affected workers, who insisted that they were not given enough notice or any palliative in lieu of the sack.

 

There are strong indications that many more companies may be toeing the same line of the food firm as they lament their frustration in sourcing dollar to back up production.

 

Read also: ECONOMY: Northern youths give Emefiele 21 day ultimatum to resign

 

But MAN in its statement called on the government to pay priority attention to the real sector by making it possible for manufacturers to have dollar in some concessionary exchange rate and also reduce interest rate.

 

Mr. Gbendga Odufanmi, executive director Nili Foods, a major confectionery company, told Ripples NiIgeria that it would be a matter of time before more companies would begin to cave in.

 

“I am yet to see any country in recession that keeps hiking interest rates, amidst many multiple taxations, and expect the manufacturing sector to remain in business.

 

“What is more worrying is that even government officials are not in agreement on how to fight the recession, as is seen in the Finance Minister asking for reduced interest rate, along with both local and foreign experts, while the CBN won’t accept that option.”

 

It will be recalled that the African Development Bank had, in its latest report on Nigeria, condemned its high interest rate and multiple taxation as the major issues to be tackled before recovery from its recession could be guaranteed.

By Emma Eke…

 

 

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