Nairametrics| Over the weekend, the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, admitted that some of the policies implemented by the Federal Government affected manufacturers in the country negatively.
“Some policies we passed affected manufacturers in terms of their raw materials and we are correcting those now. We want to discourage dumping and bad practices that happened in the past. But we need to do it in a way that does not hurt local manufacturing.” Guardian quotes him as saying.
A prominent example of this was the devaluation of the Naira. Coupled with the forex scarcity, it made 2016 a year to forget for the real sector, while giving foreign investors access to cheaper funds.
One result of this seems to be the gradual handing over of the sector into the hands of foreigners. With local producers claiming that over N50 billion was lost in profits last year, some firms were unable to sustain their operations and are now targets of takeover bids by foreign investors. This trend can inhibit the growth of local content.
For example, Swiss Pharmaceutical Company (Swipha), was practically sold over the weekend to French generic medicine manufacturer, Biogaran, who now controls over 95 per cent stake in the company. This acquisition may have been as a result of the inability of the Nigerian firm to sustain its operations due to the high cost of doing business and huge debt.
Similarly, Guardian reports that the parent company of Guinness Nigeria Plc, Diageo (a foreign company), is already planning to take up its rights by way of a debt/equity swap such that the outstanding foreign currency loan (N20.3 billion as at first half of 2017) from Diageo will be used as payment for its rights in Guinness.
While the Central Bank of Nigeria’s (CBN) recent boost of forex liquidity with over a billion dollars is a wonderful place to start the recovery journey, these examples show that the ghosts of 2016 may still be haunting the real sector. To banish these ghosts, increase local content and ownership, candid and frank efforts must be put in place by the FG to make sure that it doesn’t repeat the kind of policies that were inimical to the real sector last year.