Local manufacturers of electrical and electronics items, including cables, meters, light bulbs, fittings and accessories, have laid off more than 3,000 workers between March and September this year.
This development is as a result of continuous struggle with low capacity utilisation arising from high cost of funds, competition from cheap and substandard imports and general non-conducive operational business environment.
Further investigations shows that the continued inability of the manufacturers to access foreign exchange for the purchase of essential raw materials and machinery for production in the past 21 months has taken a heavy toll on the sector, leading to more factory closures and job losses.
For instance, a leader in the cable manufacturing industry, Coleman Wires, has laid off more than 50 per cent of its workforce within the period.
The Managing Director, Coleman Wires, Mr. George Onofowokan, “I am the Chairman of the Electrical/Electronics Group of the Manufacturers Association of Nigeria and to say there have been over 3,000 job losses in that sector between March and now is putting it mildly.
He further said, “In our own firm, we have laid off more than 50 per cent of our staff members. The market is not moving up; inventory level and production are contracting. We invested N2.5bn in a factory last year; that factory today is not functioning at up to five per cent capacity because of lack of raw materials. Although we are still servicing the loan we took to set up the factory.
He added, “What makes the situation in the cable industry more critical is the fact that 80 per cent of the raw materials we need for production are imported and there are no local alternatives, because the factories producing the local alternatives are not functioning. Even if one was to get local alternatives, the funds to buy them are not forthcoming from the banks.”
A former Chairman, Infrastructure Committee, MAN, and Managing Director, Bennett Industries Limited, Mr. Reginald Odiah, said his business of manufacturing and selling light bulbs and fittings had become so challenging that he had sacked all his employees and now relied on casual workers whom he only called when he had any job to do.
Another local meter manufacturer and the Managing Director, Mojec International Limited, Ms. Chantel Abdul, said she had been playing a waiting game with the banks to see if she could get forex to produce meters, which would be sold to electricity distribution companies.
While waiting, the firm has had to scale down on the number of her employees, because of the lack of activity in the factory.
Abdul said, “Before now, we had issues with patronage but since the campaign for local patronage started, the Discos have been patronising us. The issue now is that we are unable to produce enough meters to sell to them because a lot of our raw materials are imported.
“Although the CBN has prioritised the local manufacturing sector in terms of forex allocations, the quantity is very low compared to how much we really need.”
She added, “In addition to this is the lack of access to a single-digit interest financing to allow us produce and sell to the Discos for future payment arrangement. That is the kind of arrangement foreign suppliers are offering them, a situation where you can supply them the meters and they pay over a period of 34 months or more; but no bank is willing to give you a facility that lasts for that length of time.