All they want to do is produce, but the government wants to rush them – Nairametrics
Despite the growth of the Nigerian manufacturing sector in recent times, Nigerian manufacturers have faced growing bottlenecks as they navigate the political landmines that have become a constant feature of the poverty capital of the world.
The nominal GDP growth of the manufacturing sector in the second quarter of 2021 was 38.33%, up 38.47% from the same period in 2020. In addition, the Nigerian manufacturing sector saw real GDP growth of 3.49% year-on-year, down from 8.78% in 2020.
Beyond the successes of the global economic recovery, local small-scale manufacturers in Nigeria are groaning under the weight of the difficult business environment which continues to decimate their ability to remain profitable.
Despite government efforts, local manufacturers who spoke to Nairametrics suggested the playing field is becoming increasingly difficult to plow, citing long-standing constraints such as the high cost of generating an alternative power supply. , access to finance and the roller coaster of government policy as major threats to the survival of their businesses.
To better understand this dilemma, we spoke with manufacturers from different industries.
Our first responder, Tolulope Ajose, is the CEO of Natural & Sazzy, manufacturers of natural spices (non-MSG), powdered dates, powdered tigernuts milk and gluten-free flours. Tolulope also runs Sparkleen, a company that manufactures detergents, liquid hand washing soaps and other sanitary / cleaning agents.
She said she didn’t feel the government’s support for her manufacturing business, as the government seemed more focused on generating income from these small businesses than helping them grow and prosper.
“Government policies do not directly help our business, as there is always a gap between enforcement and actual support for business growth. What small businesses need is education and support, to comply with export standards, for example. This will make the local small-scale manufacturing sector a major generator of foreign exchange and a boost to the economy.
“What most of us are experiencing right now is a situation where the government is focusing more on generating funds from small businesses. For example, the cost of some certification standards is beyond the financial reach of small businesses, and there are still many administrative bottlenecks in certification processes. These things need to be looked at as they are a source of discouragement for newcomers ”, Tolulope disclosed.
When asked if she had received any government loans / grants for MSMEs, she replied: “No, I have not received any loans or MSME assistance with respect to this administration.”
She went further to elucidate the impact of the current currency crisis on her business.
“For my detergent manufacturing company, most of our raw materials are imported and the forex crisis is driving up our costs.
“For the food industry, even though we use local raw materials, the costs of electricity and fuel have made the production and transportation of raw materials more expensive, invariably increasing costs. The prices are higher, but all of these costs cannot be passed on to consumers, so our profit margins are eroded. “
She mentioned that power is a big challenge facing her spice and beverage business.
“The cost of electricity is a big challenge. Access to the market is also a challenge. Government assistance is needed to make electricity and fuel affordable at a lower price. As for market access, the importation of products made locally in Nigeria should be stopped. Small businesses should be encouraged to promote internal and intra-African trade with working capital and business support ”, she suggested.
Another Nigerian manufacturer, Isaac Jacob Omosimua, CEO of Crichweather International limited, a plastic recycling company, said that although his company benefits from a few state government programs, there is still a lot to be done to help the little ones. manufacturers to survive and climb.
“In Lagos State, the Sanwo Olu Administration’s Blue Box Initiative is a step taken by the Lagos State Government to support recycling activities in the State. However, more favorable policies in this regard are needed to protect the environment. “
When asked if he had received any government loans / grants for MSMEs, he replied: “So far we haven’t had access to any. We recently approached BOI for the purchase of machines, but their demands, especially in the area of guarantors, prevented us from getting what we wanted.
Jacob further said that the forex crisis was a good time for his business, with a classic case of one man’s poison being another man’s meat.
“Fortunately, the forex crisis has increased demand for our products. Some companies, for example fibers, plastics and companies that sell aluminum composite panels, are now subscribing to the use of shredded plastics and granules as raw materials ”, he said.
The major challenge for Isaac, however, is “Access to low-interest funds for expansion and shock absorption”.
For Iyoha Donatus, CEO Donatus Ehis & Co., a footwear and leather goods company established in 2015, growth is the result of hard work and personal effort, not government support.
“I have never received loans / grants for MSME. We have grown from our small start-up capital, and so far we are doing well.
“The forex crisis has negatively affected business on all sides. It strongly influenced the cost of production and the profitability of the company in general. It has led to the scarcity of raw materials despite the rise in prices.
“For example, the cost of the shoe sole has doubled and even worse, the item is not available. The same goes for some other raw materials. Logistics costs are also on the rise.
“Forex and Logistics are our main challenges. The same is not true for other companies which must struggle, among other things, with epileptic power supply, insecurity and access to finance.
“As we grapple with forex, deplorable road networks have hampered the easy flow of raw materials and finished goods to endpoints.” he disclosed.
As small businesses operating in the micro-space, these businesses depend heavily on the reach and cost-effective mass marketing alternative that social media offers. Tolulope and Donatus reiterated the criticism of many Nigerians against the ban on Twitter which has been going on for months.
“I have seen tremendous growth in sales through the digital media space as it has drastically erased the scourge of going through mediators and supermarkets that take small business products and offer sales on return terms. Digital media give direct access to the customer, improving the business-to-consumer bond.
“While the ban on Twitter did not directly affect our bottom line, the ban nonetheless poses a threat to small businesses as it indicates that other media platforms may be banned as well. Proactively, we continue to develop our websites and evolve in our capacity to adapt to the dynamics of the digital space ”, said Tolulope.
For Donatus who cited that his business was “Aggressively exploit digital media”to push local and international sponsorship, banning Twitter was a bad move because it wiped out huge revenues for many companies.