Nigeria is about to enter into a new phase in its history. Scarcity will soon become the word most commonly used by us starting from 2024.
We already have scarcity of cash in banks, foreign exchange scarcity, rice scarcity and job scarcity is about to kick in with several multinational companies voting with their feet. Procter & Gamble, P&G, being the latest to shut its gates and send Nigerian hopes of rapid industrialisation crashing at the dawn of Renewed Hope.
Unilever, formerly Lever Brothers Nigeria Limited, was the first company to establish large-scale manufacturing in Nigeria on April 11, 1923. A century after, the company, which is still expanding globally, diversifying and evolving into new areas of consumer products, has started winding down its business in Nigeria.
Scarcity of some of its products has started to show in supermarkets and open markets. Prices, subsequently, have skyrocketed of
VASELINE, LUX etc. We are lurching gradually back into 1984/85. Those old enough to remember, would recall that those were the years the term Essential Commodities, Essenco, entered our national vocabulary. People, mostly women, had to go on queues to buy ordinary bath soap, detergents, even milk for babies, sugar, sardine, etc.
Buhari’s soldiers were waiting for them. Women, including grandmothers were brutally whipped by Buhari’s young recruits in the most heartless manner imaginable. General Buhari was proud of the carnage too!!!
It has been necessary to remind those alive then and those too young to know that Buhari’s brutality resulted from acute scarcity of almost everything; and that we are closer to another round of inhuman treatment of citizens
than we think. Let me discuss them one at a time because of the ultimate implications.
ANOTHER ROUND OF CASH SCARCITY
“Banks ration cash as naira scarcity worsens.” Vanguard, December 12, 2023. Other Nigerians might have been surprised that cash scarcity has returned so soon.
VANGUARD’s Editorial staff were not. As far back as March this year, while the rest of the nation was reeling under
the assault of the first cash scarcity, we warned the nation that another round would occur any time soon. The nation is in it now.
Furthermore, this second round of cash scarcity will trigger several more in 2024.
Permit me not to elaborate now on why 2024 promises to be a year of cash scarcity – unless the FG and CBN rethink their strategies on monetary and fiscal policies. Right now, we are heading for another bleak Christmas and New Year.
FOREX SCARCITY AND THE DISASTERS AHEAD
“$792M TRAPPED FUNDS: Foreign airlines at breaking point, may exit Nigeria’s airspace.” Report, December 11, 2023. “Manufacturing s e c t o r bleeds as forex loss rises 400% to N466bn.”
Report, December 11, 2023. Try as the FG and CBN might, the present and the short term prospects for Nigeria are bleak.
Tinubu can be airborne 365 days in 2024; meet with Presidents and Prime ministers promising to help Nigeria. It will be in the national interest and his, if it is understood that not all politicians’ promises are ever redeemed. And, he is running around with a beggar’s bowl;
meeting other politicians like himself. The solution to our forex debacle is not outside but inside Nigeria. A nation lacking sufficient foreign exchange to drive the vital sectors of its economy has no business sending 422 or 1,141 delegates to COP28.
DIVESTMENT AND SCARCITY OF JOBS AND PRODUCTS “GSK, P&G:
Over 20,000 direct jobs lost to divestment, NECA cries out”. Re port, December 10, 2023.
My e x p e r i e n c e working in a manufacturing drug company, BOOTS COMPANY NIGERIA LTD, which was the darling of investors in the Stock Exchange in the 1970s; and with NORTH BREWERY LTD , Kano, proved beyond reasonable doubt that the closure of a manufacturing and marketing company results in more job losses than many people realise.
The loss of income by people is even more staggering. For instance, given Nigeria’s high dependency ratio, meaning one worker supports at least five jobless or non-working individuals, the 20,000 job losses will lead to loss of income by at least 120,000 directly.
The numbers increase as we add the losses suffered by contractors, suppliers and others associated with the company closing down.
The closure of BCN, after I left the company, was an eye-opener. I was there when we started local manufacturing of some brands.
We signed on suppliers of chemicals, packaging materials (bottles, caps, blister packs, etc), transporters and advertising agency.
They, in turn, relied on suppliers of inputs. Everybody was happy until Boots UK decided to pull out of the Nigerian market.
Manufacturing came to a halt first; and all the calamities associated with it. One printer supplied all the body labels; and he drove a Mercedes Benz. Boots’ business was enough for him; the orders flowed in. In one day, his business crashed – when he was called by the Purchasing Manager to be told the bad news. He was not alone.
The lives ruined by Boots closure were less than those demolished when NBL(K) ground to a halt. At least 1,500 big, small and microenterprises, domestic and international, are linked to a brewery. Thus, each time a brewery went down in Nigeria, uncountable number of jobs vanished. P&G and GSK represent the sort of foreign manufacturing companies a country is fortunate to have.
Incidentally, I also worked for SmithKline and French, SKF, in Nigeria, before the merger with Glaxo to form GSK. Drug manufacturers, with several products are divine gifts to domestic suppliers of raw materials, spare parts, components, packaging materials, fuel, vehicles, banking services, etc. They provide many jobs directly and indirectly. The challenge nations have increasingly is keeping them.
The unfortunate thing for a country experiencing mass exit by foreign manufacturers is the domino effect of such departures.
As everybody knows from experience, by the time you notice three-bed bugs, several hundreds are in the room. By the same token, by the time three big multinationals pack their bags, others are probably seriously considering the same decision or have already
reached the same conclusion: “time to go”. OTHERS TOO…
“Nigeria’s oil sector hit by exodus of foreign companies.” Financial Times. Thus, the announced departure of some companies in the manufacturing sector is occurring against the background of our nation’s increasing loss of economic competitiveness and hostile operating climate. Capital is always a coward. When demand and profits in constant dollars are shrinking; profits cannot be repatriated at will and there is no definite date for the transfer, then the exit door looks extremely inviting.
Today, foreign companies which are required to source a certain percentage of their inputs locally are stuck three ways. They cannot find forex to import inputs, they cannot find sufficient local raw materials e.g food and beverage sector and they can’t get their money out. What are they doing here?
Vanguard
