Shattered by High Production Cost, Manufacturers Quit Nigeria, Flung Sector in Low Ebb

The Nigerian manufacturing sector is facing existential crisis. Between 2015 and 2024, the sector has lost countless numbers of factories to high cost of production.

Our investigations revealed that more than 200 factories, across the country have been closed down because they could no longer cope with the rising cost of production in recent times.

Africa Health Report (AHR) Correspondent, Juliet Jacob writes on the scaring development, in this special report. In limbo

Declining Activities

More than 300 manufacturers have been delisted as members of the Manufacturers Association of Nigeria (MAN) within this period, accentuating the low ebb of activities in the sector.

Some of the manufacturers divested to other sectors such as oil, gas and agriculture, while others either exited the Nigerian market or stopped production and this is due to the challenges they face in Nigeria.

Power Outages Compound Problems

These challenges include ongoing problems such as  unreliable power supply which is the primary reason others includes congested ports, frequent taxation, insecurity, and inadequate infrastructure, which have severely impacted businesses in the country.

Additionally, high energy expenses, a decline in industrial production, and low consumer demand are further contributing to the decline in the manufacturing sector in Nigeria.

Key Brands Shut Down Production

Notably, several manufacturing firms have pulled out of the industry in the last decade, some of those firms includes:

Louis Carter Industries

In 2017, Louis Carter Industries shut down operations, forcing its over 40 staff members to rejoin an already crowded labour market.

Louis Carter, established in 1989 in Nnewi, Anambra State, battled with ballooning production costs, FX crunch, policy flip-flops, and high energy costs.

The company produced plastic gallons, basins, and other plastic products.

Moak Enterprises

Moak Enterprises, a prominent bottled and sachet water company in Sango-Ota, Ogun State, ceased operations in 2021. Their popular product, ‘Meridian Waters,’ had a large consumer base.

Moak manufactured numerous truckloads of sachet water monthly, distributing to various wholesalers and retailers within Ogun State and neighboring areas. The company was among those impacted by the FX crisis, leading to its closure because of the rising expenses associated with sourcing raw materials.

Tower Aluminium used to be one of the giants of the sector. But today that brand name is history to many who used to reckon with it.

In 1959, Aluminium was established in Nigeria, providing aluminum products such as cooking pots, plates, spoons, and roofing sheets to many households in the country and West Africa. However, the company closed operations in 2020.

GlaxoSmithKline Nigeria was a leading brand in the pharmaceutical and drugs where it made a significant mark.

The ongoing manufacturing operations at the drug production plant in Agbara, Ogun State by GSK became unfeasible, leading to its closure in 2021.

Subsequently, the company transitioned to collaboration with Fidson Healthcare, a different local manufacturer, for contract manufacturing.

GSK, a British multinational pharmaceutical and biotechnology company, has announced its decision to leave Nigeria after operating in the country for 51 years.

The company has disclosed that it will no longer market its prescription medications and vaccines in Nigeria through its local operating companies, opting instead to use a third-party direct distribution model for its pharmaceutical products.

Technoflex Company Limited

Technoflex was a player in the industrial plastic and foam sub-sector.

The company was shut down in 2017 due to rising production costs.

Unfortunately, the company had to close down because of increasing production expenses

 

Another important brand that has suffered the challenges of rising costs is Mayor Biscuits Company Limited

Mayor Biscuits Company Limited (MABISCO), an indigenous biscuits company in Ogun State, Nigeria, was shut down this year.

“We want to sell MABISCO because we want to concentrate on our area of core competence of business,’ the company said in a shocking statement last week, adding that “to achieve that, we have to divest appropriately.”

Prior to shutting down operations in March 2023, MABISCO, situated in Agbara Industrial Zone, Ogun State had inaugurated over 300 established distributors nationwide in seven years.

Established in 2016, MABISCO, with the state-of-the-art biscuits manufacturing technologies, has a total capacity of 3.5tonnes per hour with access to Shell LNG Gas terminal. The plant has packing machines that have the capacity to do 350 packs per minute, the statement read.

Evans pharmaceutical, another popular brand and household name.

Evans Medicals was once one of the largest pharmaceutical companies in Nigeria but lost its assets due to debts.

It had procured machines and upgraded its production facilities to ensure it achieved the World Health Organization’s (WHO) prequalification that would enable it to compete in international contract rounds.

In 2017, a court ordered that the drug maker’s assets be taken over by First Bank and the now-defunct Skye Bank due to bad debt. This ended Evans’ dreams drastically.

Critical Situation

Sadly, the list is endless. The closure of these companies has created a negative impact on cost of drugs.

Since this year the prices of drugs have been rising reaching a point that many average Nigerians cannot afford it anymore. Due to this situation many lives have been lost.

Africa Health Report notes that concerned Nigerians have raised the alarm about the degenerating state of the sector. To make the matter worst, the public hospital and primary healthcare facilities are in deplorable or dilapidating conditions in several parts of the country. Many sick people go to the hospital but could not get adequate or proper care due to lack medicines. Both local manufacturers and expatriates are going through the same unpleasant experiences.

Blame Government for Negligence, Poor Infrastructure

Looking at the development critically, it is either the government is not interested in addressing the problems or is playing politics with citizens’ lives and well- being.

Solutions

The government needs to refocus its commitment in the manufacturing sector. There is equally the need to upgrade infrastructure in the sector, especially the provision of energy and other factors of production to encourage manufacturers and make the sector vibrant once again.

Lastly, the government should prioritise the wellbeing of the citizens and urgently intervene and save the industries from complete collapse.

In other climes governments create the enabling environment for industries to grow, survive and succeed.

The governments also provide other incentives to encourage and boost confidence of the manufactures. Therefore, any responsible government does not wait until the industries die before doing the right thing.

In light of this the Nigerian federal government should wake up and act fast, by providing the basic infrastructure for the manufacturing companies to go back to production and thrive.

Equal opportunity rather than discriminatory incentives should be made available to the manufacturers, like tax waiver, lowering cost of energy and so forth. Every manufacture deserves access to loans support because their roles ultimately impact the people.

The sector contributes substantially to boost the Nigerian economy if adequate attention is paid to it.

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