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Nigeria in deep economic problems

  • 20 shipping firm exit Nigeria, Innoson Motors, Aero Contractor close shopbuhari-london

 

 

 

Nigeria is really in deep trouble as two former Central Bank Governors had stated last week.
Indeed, the Emir of Kano Sanusi Lamido Sanusi and Professor Charles Soludo both were unanimous in their comment on the economy of the country, when they said that the economy of country has terribly taken a plunge and has earned not only a bloody nose but a bloody face.
According to Sanusi, there urgent need for the country to return to the drawing board and expand the economy through wise investments capable of yielding economic growth and development, while Professor Charles Soludo, said “Nigeria is facing unprecedented and tremendous political and economical challenges with global and local dynamics. “Regardless of these challenges, opportunities and possibilities abound if we address some fundamental issues. The key to achieving this is to have a development plan that is anchored on realising inclusive and sustainable growth. “Inclusive and sustainable growth cannot be achieved without conscious efforts to deconstruct the dynasties of poverty and maximise states and Nigeria’s comparative and competitive advantage.”
What these two economist had said have started resurfacing within the country as many companies which hitherto appear healthy are now show signs of poverty and in some case relapses into total shutdown.
A major Vehicle assembly plant in Nigeria, the Innoson Vehicle Manufacturing (IVM) said its shutting production due to the harsh economy and a lack of foreign exchange.
Innoson chairman Innocent Chukwuma said workers have already been sent home because of a lack of parts from Japan, China and Germany, which account for much of the content of the vehicles they produce.
According to him, production had stopped “as we are waiting for the imported items for which there is a forex issue.”
“I believe they are doing something but if they can’t do anything we’ll lay off some workers,” he added.
Launched in 2010, IVM last year raised its annual production target for 2016 from 4,000 to 6,000 vehicles due to a “Made in Nigeria” campaign that generated strong sales to the police, state agencies and churches.
Those ambitions are now looking shaky if promises of government assistance fail to materialise, Chukwuma said.
Similarly, 20 Shipping firm groaning under intense hardship imposed by poor government policies and global economic crunch, have exited the nation’s shores.
This is coming as Dockworkers Union of Nigeria (DUN) lamented that over 3,000 workers have already been laid off by various shipping companies, terminal operators and logistic companies, owing to lack of financing and poor import policies of the Federal Government.
The workers also blamed the massive retrenchment on the inability of the Federal Government to meet its joint venture obligation with the international oil companies which are major partners with the marine logistic companies.
Some of the companies that have already made an exit include Mitsui O.S.K Line, Nippon Yusen Kasha, Taiwan’s Evergreen Line, Messina Line, Hapag-Lloyd and Gold Star Line (GSL), among others which were forced to withdraw from the West Africa route due to growing losses as a result of declining volumes.
The President, Dockworkers Union of Nigeria (DUN), Anthony Emmanuel Nted, yesterday bemoaned the poor state of the ports, terminal and work environment in the maritime industry.
Nted revealed that about 20 shipping firms have left the shore of the country because of low traffic occasioned by government importation policy.
According to him, Nigeria as an import-dependent country cannot suddenly ban the importation of the principal goods being generally consumed in the country.
“Hence, the current government policy on importation though with the best intention seems to be wreaking more havoc on the economy and ought to be reviewed urgently,” he said.
He, therefore, urged the Federal Government to review the ban on the importation of rice, wheat, vehicle spare parts and industrial machinery until the nation is able to produce for local consumption. He added that the failure to do this would encourage smuggling, diversion of ships to neighbouring countries, idle ports, retrenchment of workers, unemployment and general loss of revenue to government.
According to him, some of the employers of Intels and other logistic companies, which render services to the IOCs are being faced with financial challenges and therefore forced to retrench workers.
He said: “The non-payment of cash calls by government to these oil companies as per their joint venture agreements has been a major setback to the funding of the service of our employers (the logistic companies) and consequently responsible for the massive retrenchment of our members.”
But Nted decried the alleged moves by the Nigerian Ports Authority (NPA) to sack a section of dockworkers, tally clerks and onboard security men.
He lamented that the volume of vehicles imported into the country through ports has collapsed to an all-time-low, with the consequent loss of thousands of jobs in the industry.
This was attributed to the duty regime introduced since 2014 and the implication of the new exchange rate for duty calculation, which has made the importation of cars and trucks too expensive.
“In the last two years the number of vehicles in Nigeria has shrunk by almost two-thirds, while the volume of cars smuggled through Cotonou continued unabated,” he said.
Also, the Maersk Supply Service, a part of Danish shipping and offshore energy conglomerate Maersk Group, is apparently adopting austerity measures as it moves to reduce its Offshore Supply Ship Vessel (OSV) fleet by 20 in the next 18 months, even as it plans to reduce its crew pool by 400 offshore positions.
The company said that the divestment plan was a response to vessels in lay-up, limited trading opportunities and the global over-supply of offshore supply vessels in the industry.
The Chief Executive Officer of Maersk Supply Service, Jorn Madsen, said: “We are facing unprecedented market conditions, and regrettably we have to further adjust our crew pool. It is an unfortunate, but necessary step to safeguard the future of our company”.
The aviation industry is not left out, as Aero Contractors Airlines has said that it would suspend all its scheduled services indefinitely from Thursday Sept. 1, 2016.
The airline’s Chief Executive Officer, Mr Fola Akinkuotu, said in a statement in Lagos that the management decision was part of the strategic business realignment to reposition the airline and return it to the path of profitability. He said that all staff directly and indirectly involved in providing the services, would also proceed on indefinite leave of absence. “This business decision is as a result of the current economic situation in the country, which has forced some other airlines to suspend operation or outrightly pull out of Nigeria. “In the case of Aero, the airline has faced grave challenges in the past six months, which impacted its business and by extension the scheduled services operations,’’ he said. Akinkuotu said the impact of the external environment had been very harsh on the airline’s operational performance, hence the management’s decision to suspend scheduled services operations indefinitely effective Sept.1, 2016. “This suspension is pending when the external opportunities and a robust sustainable and viable plan is in place for Aero Contractors to recommence its scheduled services. “The implication of the suspension of scheduled services operations extends to all staff directly and indirectly involved in providing services, as they are effectively to proceed on indefinite leave of absence during the period of non-services. “We are aware of the impact this will have on our staff and our highly esteemed customers, hence we have initiated moves to ensure that we are able to return back to operations within the shortest possible time, offering reliable, safe and secure operations,’’ he said. Akinkuotu said that both internal and external environmental factors had made it difficult for the airline to continue its scheduled services, leading to the management’s decision.

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