Connect with us
nairametrics
UBA ads

Business News

Massive job losses loom as WEMPCO Group preps for exit

250,000 Nigerians might lose their jobs if WEMPCO group exits Nigeria due to its numerous crisis.

Published

on

galvanised sheets

Several crises reportedly facing the Western Metal Products Company (WEMPCO) may further worsen the unemployment challenges in the country as about 250,000 jobs are currently being threatened.

Earlier, it was reported that the popular Oriental Hotel in Lagos, owned by WEMPCO Group, is planning to leave the country after over four decades of doing business in Africa’s largest economy.

UBA ADS

However, reports of WEMPCO’s imminent exit took another twist, as several media reports have revealed that no fewer than 19 enamelware firms are equally closing business due to WEMPCO’s proposed exit. While the exit of Oriental Hotel may result in 14,000 job loss, WEMPCO group exit may lead to a whopping 250,000 Nigerians losing their daily means of livelihood.

Background Story of WEMPCO Operations in Nigeria – WEMPCO which has a heavy presence in steel and hospitality sectors is reportedly being faced with a debts burden of over N90 billion. Specifically, WEMPCO is the authorised sole distributor of cold-rolled iron sheet used in the manufacturing of roofing sheets and annealed iron sheets used in the manufacturing of enamelware.

WEMPCO was founded by Lewis Tung and his brother Robert Tung to produce roofing sheets, galvanised pipes, wire nails, plywood, ceramic tiles and sanitary ware. The company is actively involved in agricultural and hospitality sectors with 11 subsidiaries.

GTBank 728 x 90

The group is witnessing hard times and is considering leaving Nigeria along with its steel plant, which has 700,000 tonnes-capacity and about 14,000 people currently employed, mostly Nigerians.

How WEMPCO’s imminent failure began – It has been revealed by a section of the media that WEMPCO’s trouble stemmed from the influx of substandard roofing sheets smuggled into Nigeria from Cameroon and other neighbouring countries.

Accordingly, local firms in steels sector have been mandated by the Standards Organisation of Nigeria (SON) to keep the standard of roofing sheet at 0.015mm in thickness. This reportedly posed competition challenge against smuggled roofing sheets which were 0.013mm and 0.014mm.

Deal book 300 x 250

To compound its woes, the smuggled products were also said to be preferred by buyers due to cheaper prices being charged. Hence, this results in low patronage and stock of inventories unsold. By the end of 2018, the company had reportedly closed down almost all its plants as they were no longer producing.

Although, top directors in the steel and hospitality sectors have disclosed that the reasons for the group’s ordeal are poor corporate governance, over-dependence on government policy, inability to consider Nigerian realities before making key decisions, and harsh business environment.

WEMPCO and its questionable operations – In  2017, the Chief Magistrate Badejo-Okusanya of an Ogba magistrate’s court awarded N11million damage against WEMPCO  over an alleged breach of contractual agreement with a businessman, Emmanuel Onaiwu and his company, Unibomec Technical Apex Limited. This suggests the company has been defaulting in business transactions.

app

Similarly, in 2018, scores of casual workers at WAMPCO annex, Magboro, Ogun State, allegedly protested against the inability of the management of the WEMPCO to pay their salaries for over three months.

WEMPCO’s sharp practises maybe responsible –  It has been revealed that WEMPCO was alleged to have abused the exclusive rights and waivers that were granted to it by the Federal Government for the former President, Goodluck Jonathan. The previous government had granted the firm heavy waivers to aid it in the production of cold-rolled sheet locally.

Similarly, in 2015, the Central Bank of Nigeria (CBN), as part of its initiative to resuscitate local industries and improve employment generation, released a list of items not eligible for foreign exchange in the government-created Importers & Exporters window. Among the 41 items on the list are cold-rolled steel sheets, galvanized steel sheets, and roofing sheets. However, the firm had instead embarked on heavy importation of the product.

devland
Coronation ads

Meanwhile, reports have shown that WEMPCO trouble began when the current administration of President Mohammadu Buhari assumed office and decided to cancel the waivers. Since then, it has been a mountain task for WEMPCO imports and meets local demands. The aggressive import stoppage policy is Buhari in no doubt is good for the economy, but it needs to be done in such manners that big companies don’t exit the country to avert increasing unemployment woes in the country.

Nigerians may be the worst hit – WAMPCO may eventually exit Nigeria, and the implication is that all the firms that produce roofing sheets and enamelware in Nigeria may have to shut down.

GTBank 728 x 90
thegreenafricaproject 300x250

With this imminent closure, massive jobs loss will further worsen the unemployment rate in Nigeria which currently stands at 23.1 percent. This is definitely not a good sign for a fragile economy like Nigeria that is just gradually rising towards a sustainable economic growth path.

Patricia

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Business

Austin Avuru retires as CEO of Seplat petroleum, to receive huge benefits

According to the notice, Avuru will be considered a “good leaver” on his retirement.

Published

on

Seplat to acquire more oil & gas assets after Eland's acquisition

Co-founder and Chief Executive Officer of Seplat Petroleum Development Company Plc, Austin Avuru has retired as CEO of the company, but will remain on the board as a Non-Executive Director.

According to a notice sent to the Nigerian Stock Exchange and signed by the company secretary Mrs Edith Onwuchekwa, the resignation took effect on July 31, 2020.

UBA ADS

What this means

According to the notice, Avuru will be considered a “good leaver” on his retirement and receive his remuneration and benefits as such.

The Remuneration Committee has confirmed that Avuru will receive “a lump sum payment in lieu of notice equal to his salary, benefits, and pension allowance until November 18, 2020” as well as other security and travel benefits.

He would also receive a loss of office payment equal to 12 months’ salary, as compensation and in accordance with the Nigerian market practice.

GTBank 728 x 90

In line with the provisions of the Directors’ Remuneration Policy approved by shareholders of the Company at its 2018 AGM, he will also receive a pro-rata bonus (in cash) to reflect his time as CEO during the financial year, and same “will be provided in the Company’s Directors Remuneration Report for 2020 and subsequent years”.

Seplat will also vest awards made in form of deferred shares in 2019 and 2020 at the normal vesting dates, and subject to the achievement of the relevant performance conditions, and Avuru will be subject to the post-employment shareholding requirement for two years.

The company management and board appreciated Avuru for his ‘excellent leadership’ in growing the company to become a notable player in the Nigerian and wider African hydrocarbon industry.

Deal book 300 x 250

Backstory

On November 18 2019, Seplat Petroleum Development Company Plc announced that Mr Austin Avuru will be retiring as CEO at the end of July 2020.

This is in line with Avuru’s earlier plans to retire sometime around his 62nd birthday.

 

app

 

Patricia
Continue Reading

Business

Just in: Buhari orders payment of stranded NDDC scholarship students, commision gives reason for delay

The delay, it was revealed, was caused by the sudden death of the then EDFA of the commission.

Published

on

President Buhari Democracy Day speech

President Muhammadu Buhari has ordered the Niger Delta Development Commission (NDDC) to immediately pay the fees and stipends of the stranded Nigerian scholars who have been facing hardships abroad.

This was disclosed in a press statement by the NDDC and signed by the commission’s Director for Corporate Affairs, Charles Obi Odili, on Tuesday, August 4, 2020.

UBA ADS

Odili revealed that the delay in the remittance of the fees for these scholars was caused by the sudden death of the then Acting Executive Director for Finance and Administration, EDFA, of the commission, Chief Ibanga Etang.

Odili stated, “Under the Commission’s finance protocol, only the Executive Director (Finance) and the Executive Director (Projects) can sign for the release of funds from the Commission’s domiciliary accounts with the Central Bank of Nigeria, CBN. With the death of Chief Etang, the remittance has to await the appointment of a new EDFA’

Odili stated further that, “Senator Akpabio, the Honourable Minister, said President Buhari who has been briefed on the protest by students at the Nigerian High Commission in London, has ordered that all stops be pulled to pay the students by the end of this week. We expect a new EDFA to be appointed this week. As soon as that is done, they would all be paid.”

GTBank 728 x 90

It would be recalled that the plight of the Nigerian scholars came to the fore after it was revealed, the terrible conditions they were going through in foreign countries since not being able to pay their tuition fees. These revelations caused outrage on social media with many blaming the government for not caring enough for its people.

The non-payment of the allowances and tuition fees of the students by NDDC is coming amid the corruption and financial mismanagement allegations that have been rocking the commission for some months now.

The students said they are going through a lot of hardship due to lack of funds from the NDDC and are unable to engage in menial jobs to survive because of the impact of the coronavirus pandemic.

Following up with its own intervention, the Chairman of Nigerians in Diaspora Commission (NIDCOM), Abike Dabiri-Erewa, asked the NDDC as a matter of urgency to pay the allowances, tuition fees and other incentives of students under their scholarship scheme.

She said that last month, she wrote a letter to the Minister for Niger Delta Affairs, Godswill Akpabio, drawing his attention to the plight of the Nigerian students under the NDDC scholarship scheme in Europe.

app
Patricia
Continue Reading

Business

NIPOST’s new charges could have ruined the e-commerce/logistics industry

The backlash NIPOST got from SME proved enough to get the attention of the FG.

Published

on

Minister denies approving NIPOST license fee increment , Isa Ali-Pantami, NCC to determine number of phone numbers entitled to an individual  

The Nigerian Postal Service introduced new charges that would cause an increase in the costs of licensing for logistics and courier service providers which resulted in major outrage all over the internet and rightly so.

According to the Vanguard, International courier services like DHL and UPS were expected to pay N20M for a new license and N8M annually while national service providers were to pay N10M for the license to operate and N4M for annual renewal. As for the logistics companies operating within regions, they were to pay N5M for license and N2M annually while firms operating within states got N2M for licence and N800,000 for renewal. Courier firms within municipalities were to pay N1M license fee and N400,000 annually and for SMEs, the license was set at N250,000 while the annual renewal is N100,000.

UBA ADS

Reportedly, the General Manager, Corporate Communications, Franklin Alao, said in a statement that the new regulations were not planned to frustrate ease of doing business rather they aimed to promote growth of MSMEs. He said, “It is part of the strategies to ensure effective service delivery as consumers would know the capacities of the operators they are dealing with… Kindly note that consumers of the courier service would be better off as this will drive charlatans out of the industry. Genuine and serious operators would come back to celebrate this move.”

Fortunately, all through last week, the backlash NIPOST got especially online from SME proved enough to get the attention of the Federal Government because as the Premium Times reported, on Saturday, Isa Pantami, the minister of communication and digital economy rejected the proposed increment on the fees for courier services companies by the Nigerian Postal Services (NIPOST).

Pantami said in a tweet, “Our attention has been drawn to an increase of license fee, which was not part of the regulation I earlier approved for you… Your Chair and PMG were yesterday contacted to put the implementation on hold and send a report to our ministry by Monday. Best Wishes”. Pantami also said “I know the economic challenges of NIPOST. However, looking at the economic hardships of our citizens, we need to suspend any move.”

GTBank 728 x 90

This could have been really bad

The increase in charges would affect three main industries in the economy: e-Commerce, SMEs and ride-hailing.

  1. On Tech Round Up, we discuss time and again how the e-Commerce growth in Nigeria is directly propositional to logistics. As a statement of fact, an e-commerce firm’s level of functionality is heavily based on the strength of their logistics abilities. In essence, e-commerce will not work without the backing of an effective logistics structure.

With Covid-19 came a boom in the Nigerian e-commerce space. Last week, we discussed the increasing interests in M&A deals as MumsVillage and Baby Bliss merged to form the Bliss Group. Also, many consumers had since the lockdown, become dependent on online shopping- this without a doubt will affect these groups of individuals if the government should let this charge increase happen. It will without a doubt increase the prices of goods online and eventually, the boom in online shopping culture may drop drastically.

  1. Small businesses are the backbone of our nation and the same can be said for most economies around the globe, this kind of outrageous increase on charges will only further discourage these already struggling businesses from operating. This increase in fees, if the minister had not interfered would have only made the entire situation of our economy worse. Allegedly, NIPOST had already started seizing delivery motorcycles and demanding fees up to N250,000 from some businesses. This is a lot of money right now especially with most of these small businesses and companies moving their operations online and using logistics to delve into untapped audiences.
  2. The Ride-Hailing Businesses too since the beginning of 2020 has had to readjust, restructure and reevaluate a lot of their offerings. For those firms who have delved into the logistics space full time, these charges may have completely ruined their already slim chance of surviving.

It is a struggle out in these streets. Nigerians and the Nigerian economy has suffered severely in these last few months due to the pandemic- businesses, companies, industries and individuals have been left to bear some great losses and it seems the not so great news keeps on coming.

Another reason why this agenda to increase fees appeared fishy was because they seemingly announced this right after the NIPOST had purchased a fleet of delivery motorcycle- so was it their intent to intimidate or maybe strong-arm the competition and monopolize the sector? Maybe we will never know but it definitely did not sit well with many Nigerians, hence the outrage on the internet.

Even if these charges do get implemented, the NIPOST needs to allow enough time for the economy to stabilize rather than implementing an outright increase that could result in the shutdown of operations of those involved in logistics. There are smarter more mutually productive ways to coexist. These governmental bodies need to figure these out and implement them, it is important for governments and industries to work together to manage the changes that will improve our economy.

app
Patricia
Continue Reading
Advertisement
Advertisement
Patricia
Advertisement
Advertisement
first bank
Advertisement
Heritage bank
Advertisement
devland
Advertisement
devland
Advertisement
GTBank 728 x 90
Advertisement
Advertisement
financial calculator
Advertisement
devland
Advertisement
app
Advertisement