Top industrialist and one of the leading entrepreneurs in Nigeria, Dr. Emmanuel Iheagwazi has called on President Bola Tinubu to urgently intervene in the problem of foreign exchange available to manufacturers who have to import raw materials for local production.
At a news briefing at his lubricant factory in Mowe, off Lagos-Ibadan Expressway in Ogun State, Dr Iheagwazi, who is the Chairman/CEO of Necit Nigeria Limited, said the recent scarcity of forex and devaluation of the naira had badly affected manufacturers who had to buy dollars at cut-throat rates from commercial banks who would issue their Letters of Credit (LC).
He explained that some banks had been making life difficult for him and his business by insisting that he was owing them despite providing a 130 per cent guarantee to them before they issued him Letters of Credit.
Dr Iheagwazi said that 40 per cent of the raw materials for lubricants were sourced locally, while the remaining 60 per cent had to be imported and that is where the banks tend to rip off the company with outrageous and backdated charges.
“We import some from the US, Europe and some from the Russian Federation. Because of such importation we have to work with banks because they are the ones that will open the LCs that we use for importation or if we are privileged to get bills for collection the banks will also come in since we cannot have direct access to the CBN, we have to go through the banks. That is how we started and we were fine.
“And then, coming to 2023, some banks started writing to us that remember you opened LCs with us in 2021 and you gave us the cash and we want to remind you that we were not able to get the money from CBN as such the devaluation is hitting them and we need to bring extra money. I say, from where will I get extra money to give you?”
Dr. Iheagwazi said that he had written to the Central Bank of Nigeria and the Manufacturers’ Association of Nigeria on his predicament to no avail.
He appealed to President Tinubu to intervene in the crisis as he was not the only manufacturer affected in what he described as fraudulent practices of the banks.
“The banks asked us to provide 130 per cent as coverage and we provided that 130 per cent. For some of them 120 per cent. They told us that those extra 30 per cent on it is to cover the length (90 or 180 days) that it will take them to liquidate those lines. So, that is what we did. We provided the cash back.
“We borrowed N2bn from a bank for the equivalent of $5m at the exchange rate of N400 to the dollar then and we had a turnover of $43m on it within two years. But all of a sudden, we supplied oil to a multinational company and they paid through the bank and the bank seized the money up till today. They said it is because of the devaluation of the naira. And I said I gave you cash back of 130 per cent. That is when I now discovered that the bank is no longer business enabler that they are murdering businesses.”
Dr Iheagwazi said banks who gave the company loans before the devaluation of the naira were now coming back to ask for more money from the company for concluded transactions.
“When the government officially announced the devaluation of the naira, four banks wrote to us again saying we are going to bring extra money for transactions of 2021 and 2022. Every transactions we did was before the devaluation of the naira. The bank held our money in their accounts and they didn’t give us the money to do business yet they are charging us interest on it. They are earning interest on those money and still charging us for past transactions. This is wickedness and slavery.”
Dr. Iheagwazi, who declined to mention the banks, said despite the challenges he was determined to remain in business and that his chain of lubricants was of high quality and could stand shoulder to shoulder with imported varieties.
Also speaking, the Financial Controller of the company, Mr Seyi Okunuga said the country’s interest rate was too high coupled with the high cost of importation of raw materials and the increasing price of petrol and diesel, choking businesses.
He said manufacturing companies were shutting down their factories because of the unfriendly business environment.
“The unemployment rate in Nigeria as at the fourth quarter of 2023 stood at 38.5 per cent, while the poverty rate stood at 38.8 per cent. These are indications that all is not well. And the reason we are having all of these high and negative indices is because the key fibre that is needed in the economy to drive the growth and employment and to boost that has not been considered or given a top priority by the regulators and by the government of the day.
“That is why we are here to voice out our own pain before it’s is too late, before we have to shut down our operations and lay off well over 2,500 employees of the company, both directly and indirectly, which is still going to cause a lot of problems to the economy.”
Mr Okunuga called on the Federal Government to urgently help the manufacturing sector to avert job losses.
“The last report by the Manufacturers’ Association of Nigeria churned out as at the end of the first quarter (2024) showed that well over 757 companies had shut down in Nigeria between January 2023 and December 2023. This figure is totally one that shouldn’t be taken lightly for any government wants the growth and wants people to be gainfully employed in the country. Now, that is a number that we could actually see. There are millions of SMEs that could no longer do business again in Nigeria today because of high cost of operations, high energy cost, and so many other things such as the removal of fuel subsidy and the unification of the FX regime that the government of the day brought in,” lamented Okunuga.
On his part, the General Manager, Necit Nigeria Limited, Mr Onu Obasi said the company have over 2,500 direct and indirect staff who would become jobless if the company shutdown its operations.
He further identified challenges facing the manufacturing sector to include multiple regulations, tax related issues, double digit interest rate, and high import duty on raw materials, which had eroded the gains of ease of doing business.
