Capitalising on forex crisis

Also published in Daily Trust

As the economic repercussions of the discontinuation of the regular supply of foreign exchange to bureau de change (BDC) operators by the Central of Bank of Nigeria (CBN) continue to unfold, there are tremendous opportunities for local manufacturers and entrepreneurs, in particular, who can capitalize on the situation to achieve phenomenal growth.

After all, since they lost ground following the gradual collapse of the country’s local industries, Nigeria’s economy lost a great deal of its economic potential. This is though, some local manufacturers, especially in southern Nigeria, have, nevertheless, managed to not only survive, but, in fact, thrive anyway, as many successful entrepreneurs have emerged and grown into successful business owners. However, unfortunately, in northern Nigeria, which was already lagging behind economically, ever since the eventual collapse of the region’s vibrant and promising industries, the situation has been going from bad to worse.

The hitherto pulsating industrial areas in Kano, Kaduna and elsewhere in the region simply died down. Also, local partners of automobile assembly plants, subsidiaries of foreign firms, franchise holders and local distributing agents of various foreign companies, failed to maintain their very profitable engagements with their respective foreign manufacturers/ partners, which drove them out successively.

Meanwhile, the quality of products still being made in the country, including the products made by franchise holders of many reputable international brands, and other subsidiaries of many foreign firms in the country, has, ever since then, continued to decline. One simply needs to compare the quality of items made in Nigeria, e.g. soap, toothpaste, detergent, textiles, building materials, packaged, canned and wrapped edibles e.g. powder and liquid milk etc, and even medicine also, with similar products made elsewhere to realize the huge difference. 

Moreover, huge warehouses in Kano, for instance, where local agricultural produce and other locally-made industrial products were being stored for onward delivery and distribution across the country and beyond, are now rented out to some smuggling accomplices masquerading as clearing agents, to unload and keep smuggled goods for onward delivery.

It’s very unfortunate that, many Nigerian industrialists have over the decades turned into fully fledged importers and smugglers flooding the country with foreign goods that should ordinarily be locally-made or produced. However, now that the CBN has discontinued the already largely bastardized and abused forex supply regime, which has resulted in the continued depreciation of the value of the naira in the parallel market, Nigerian importers and smugglers have been caught on the horns of a tricky dilemma. 

While they run out of the existing stocks; the prices of which they keep increasing, the purchasing power of their naira sales proceeds continue to dwindle, rendering them unable to afford the amount of forex they need in order to import even the same quantity of stocks they had imported before the beginning of the forex crisis. This has driven, and indeed continues to drive many of them out, at least for the time being.

It has, therefore, never been more favourable for local manufacturers and entrepreneurs. Besides, though some few importers and smugglers would still manage to import anyway, their selling prices will definitely remain and indeed keep going up due to the continued dwindling of the value of the naira, and millions of Nigerians can’t afford to buy. Therefore, with the availability of reliable locally-made alternatives, local manufacturers and suppliers would definitely have competitive price advantage, while the importers and smugglers lose ground.

Though, admittedly, this is not, realistically speaking, easily achievable immediately, in view of the enormous challenges bedevilling the country’s business environment. After all, Nigeria is already one of the worst countries to do business in the world, as indicated by the World Bank Group Ease of Doing Business Ranking index 2015, where Nigeria was ranked 169th out of 189 countries surveyed, and was also ranked 36th out of 47 Sub-Saharan African countries surveyed.

Nonetheless, considering the sheer enormity of the country’s customer base, which is the largest in Africa, and other potential, resilient local manufacturers and ambitious local entrepreneurs can capitalize on the situation to exploit their full potential in various profitable enterprises.

Besides, the age-old claim that, due to high cost of production in the country, locally-made products can’t compete with the imported ones in terms of quality and price is no longer valid under the current circumstance. After all, it (i.e. the claim) is just a pretext often repeated by the largely unmotivated “money miss road” businessmen who are only “good” in flooding the country with imported and/or smuggled items, while they simply seek to cover up their cluelessness in modern business management. 

   

Ambitious local manufacturers and entrepreneurs, therefore, need to imbibe passion and determination adequate enough to enable them to cope with the challenges posed by the endemic corruption, ridiculously poor economic infrastructure, obsolete, opaque and frustrating bureaucracy, among other things, which characterize business environment in the country, and which obviously informed the World Bank’s poor ranking of Nigeria.

They also need to imbibe the culture of operational efficiency and excellence to ensure full compliance with quality and safety standards of the products they produce and the services they render. 

While this will certainly help avert the looming scarcity of many basic commodities, and check the rising inflation in the country, it will also help create millions of jobs for Nigerians, and indeed help put the country’s economy on the path of sustainable growth and competitiveness.