Given the recent scarcity of foreign exchange in the Forex market, some manufacturers have been forced to source inwards for local raw materials and substitutes. Lamenting the almost impossibility of accessing Forex through the official route, and seeing that getting it through the black market has proven to be very expensive, manufacturers in Nigeria has no choice.
This has left them to resort to an urgent search for raw materials and substitutes that could be sourced locally, reports the PUNCH.
President, Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, has called on members of the association to focus on local sourcing of raw materials in view of the Forex control and its challenges for the sector.
Chief Executive Officer, PEL Extracts Limited, master wine brewers, Mr. Linus Kotey, said that his company had started doing everything to find local substitutes instead of waiting for foreign exchange, adding that although the raw materials for wine are locally sourced, some of the packaging materials are imported.
Also, Diageo, the parent company of Guinness, is targeting 70 per cent local raw materials by 2017, the Corporate Communications Manager, Guinness, Olayinka Edmond, says the raw materials for one of the firm’s brands, Orijin Bitters, are 100 per cent locally sourced.
Group Managing Director and Chief Executive Officer, Chemstar Paints Industries, Mr. Emmanuel Awode, similarly has said the firm was scouting around for local substitutes for its paint materials.
Mr. Emmanuel Awode who lamented that the dollar scarcity is particularly hard on the paint industry because over 70 per cent of the raw materials are imported, revealed that the company was also looking around for local substitutes.
The Chairman, BUA Group, Abdulsamad Rabiu, has mentioned that in the last three years, the firm had gradually divested from business areas that were largely dependent on foreign exchange in favour of businesses whose raw materials could be sourced at least 90 per cent locally.
According to the BUA Group boss, the company was fully concentrating on their core business including agriculture, mining and manufacturing that are less forex-dependent.
Fall in global oil prices has weakened the naira against the dollar while the Central Bank of Nigeria maintains an official exchange rate of N197 to a dollar.
The CBN later announced the closure of its official forex window, the Retail Dutch Auction System and Wholesale Dutch Auction System and followed the action by banning importers of 41 items from accessing forex at the official market, an action, which further caused the naira to plummet.
In January 2016, the apex bank lifted the ban on lodgements into domiciliary accounts while announcing that it had stopped the sale of forex to over 2000 bureau de change operators nationwide.