Ogun producers decry N350bn unsold stock

Producers in Ogun State have decried the sluggish progress within the sector which has led to a stockpile of unsold completed items valued at N350bn.

This problem, they are saying, is a part of a broader disaster tied to hovering prices, foreign exchange shortage, and infrastructural decay that has hobbled productiveness lately.

The Chairman of the Producers Affiliation of Nigeria Ogun State Chapter, George Onafowokan, talking on the group’s latest thirty ninth Annual Common Assembly in Abeokuta outlined the extreme challenges confronting the sector.

Onafowokan pointed to the “unavailability of international alternate and skyrocketing greenback charges” as the first elements stifling producers, describing it as “a each day dilemma” that has develop into an existential risk for a lot of companies.

Onafowokan revealed that, because the naira was floated in 2023, its worth has plunged by practically 70 per cent, reaching an all-time low of N1,900 per greenback in February 2024.

This drop has compelled producers to depend on the black market to fulfill their foreign exchange wants, the place they pay a premium that doubles their manufacturing prices.

“Following these foreign exchange reforms, the sector has seen vital losses, with some 16 main producers shedding N792bn to foreign money depreciation alone,” Onafowokan said.

Along with foreign exchange points, Onafowokan highlighted a capability utilisation drop to 2.4 per cent.

“Excessive prices and international alternate shortage make it tough for producers to import important uncooked supplies, pushing many corporations to close down or minimize jobs,” he mentioned.

This has compounded the sector’s monetary pressure, leaving a large stock of unsold merchandise as shoppers grapple with inflationary pressures, he added.

Ogun’s poor street infrastructure additionally continues to harm producers.

“Many main expressways and hyperlink roads are in dire want of upgrades, and transportation prices have soared as haulage companies improve fares or refuse companies totally,” Onafowokan mentioned.

Whereas he lauded the state authorities for initiating repairs on key industrial routes just like the Atan-Igbesa-Agbara street, he urged swift motion on different roads to forestall additional losses.

Onafowokan famous power prices additional exacerbated Ogun producers’ challenges.

He defined that as a result of an unreliable electrical energy provide, producers spend about 40 per cent of their manufacturing prices on power, counting on costly mills.

A latest 240 per cent hike in electrical energy tariffs, mixed with rising diesel and fuel costs, has made the state of affairs practically untenable, he posited, including that “The sudden tariff improve and disconnections imposed by the Nigerian Electrical energy Regulatory Fee are solely pushing our prices greater.”

Visitor speaker and Managing Director of Skystone Finance Firm, Ola Olabinjo, addressed producers’ considerations over foreign money volatility, calling for a “predictable, secure alternate price regime.”

Olabinjo added, “Producers aren’t chasing extraordinary income; they simply need sufficient margin to cowl manufacturing prices and pay employees a dwelling wage.”

He criticised the federal government’s heavy tax expectations on producers, noting, “Our companies are stretched too skinny to bear additional tax burdens.”

Olabinjo suggested producers to undertake shorter money conversion cycles, take into account various native uncooked supplies, and discover Nigeria’s debt capital markets for financing as an alternative of relying on industrial financial institution loans.

“A strategic strategy to financing and stock can considerably ease the pressure on producers,” he mentioned.

In the meantime, Ogun State’s Commissioner for Business, Commerce, and Funding, Adeola Sofela, emphasised that the federal government is dedicated to enhancing the state’s enterprise local weather.

“We’re targeted on setting up essential infrastructure, just like the Abeokuta-Lagos and Atan-Igbesa-Agbara roads, and harmonizing taxes to scale back the burden on producers,” Sofela mentioned.

He assured stakeholders of the federal government’s assist, noting, “Our aim is to keep up Ogun’s standing as Nigeria’s industrial capital.”