Manufacturers who spoke to our correspondent said they had embarked on urgent search for raw materials and substitutes that could be sourced locally because access to forex through the official route was near impossible while getting it through the black market was very expensive.
The 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.
The bank had also in August 2015 barred banks from accepting cash deposits into domiciliary accounts as a measure aimed at preventing fraud and round tripping.
But 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.
The action by the CBN fuelled speculation, which caused one dollar to exchange for as high as N391 at the parallel market as of Thursday, February 18.
The dollar had further increased to N400 before the naira firmed up against it on Monday and Tuesday, February 21 and 22 to exchange for N371 and N310 respectively.
A master brewer of wines, Mr. Linus Kotey, said that his company had started doing everything to find local substitutes instead of waiting for foreign exchange.
According to Kotey, who is a biochemist and the Chief Executive Officer, PEL Extracts Limited, although the raw materials for wine are locally sourced, some of the packaging materials are imported.
“We are working hard to see if we can find locally sourced packaging materials or substitutes for the current packaging that we have,” he explained.
Also, Diageo, the parent company of Guinness, is targeting 70 per cent local raw materials by 2017, the Corporate Communications Manager, Guinness, Olayinka Edmond, told our correspondent.
According to her, the raw materials for one of the firm’s brands, Orijin Bitters, are 100 per cent locally sourced.
Similarly, an agro investor and exporter, Mr. Abiodun Oladapo, told our correspondent that the firm had in the past one month been substituting soya beans for its imported feed mill.
In the same vein, the Group Managing Director and Chief Executive Officer, Chemstar Paints Industries, Mr. Emmanuel Awode, said the firm was scouting around for local substitutes for its paint materials.
He said, “The dollar scarcity is particularly hard on the paint industry because over 70 per cent of our raw materials are imported, but we are looking around for local substitutes.”
The Chairman, BUA Group, Abdulsamad Rabiu, in a statement made available to our correspondent, said 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
He said, “We are fully concentrating on our core business including agriculture, mining and manufacturing that are less forex-dependent.”
The President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, had earlier 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.
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