NECIT Nigeria Limited CEO Calls for Government Intervention Amid Banking Sector Challenges Threatening Manufacturing Sector
BANKING SECTOR THREATENING MANUFACTURING SECTOR; NECIT NIG LTD CALLS FOR GOVERNMENT INTERVENTION
NECIT Nigeria Limited, a leading manufacturer of lubricants, has raised an urgent call for government intervention in the financial challenges facing the manufacturing sector, citing the detrimental impact of commercial banks' practices on their operations. During a press briefing, the Chief Executive Officer, Dr. Emmanuel Iheagwazi, highlighted the risks to the company's survival due to unresolved foreign exchange debts and the overbearing policies of regulatory agencies.
Dr. Iheagwazi explained that NECIT Nigeria Limited, which employs approximately 2,500 workers, is at risk of closure due to a standoff with banks over dollar-denominated loans taken before the naira's devaluation. Despite providing 130% cash cover for these loans, the banks are now demanding additional payments based on the current exchange rates, putting the company's future in jeopardy.
"Our company has been in operation since 1999, specializing in the production of lubricants. We owe no bank. However, due to the devaluation of the naira, banks are coming after us to pay for transactions concluded in 2021 at 2023 rates," said Dr. Iheagwazi. He stressed that the company's survival is crucial not only for its employees but for the wider manufacturing sector in Nigeria.
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| L-R: MD, Mr Obasi Onu; GM, CEO, Dr. Emmanuel Heagwasi; Financial Controller, Mr. Seyi Okunuga |
He also criticized the Central Bank of Nigeria (CBN) and the Manufacturers Association of Nigeria (MAN) for not adequately addressing the challenges faced by key industry players. He noted that while 40% of the raw materials used in production are sourced locally, the remaining 60% are imported, making the company heavily reliant on foreign exchange (FX). The company has been burdened by backdated and inflated charges from banks, which Dr. Iheagwazi described as an obstacle to business rather than the support banks initially provided.
"The ease of doing business promoted by the government has turned into a nightmare due to multiple regulations, tax issues, and double-digit lending rates from commercial banks. The government's intervention is urgently needed to save the manufacturing sector," he added.
NECIT's Financial Controller, Seyi Okunuga, echoed these concerns, emphasizing the macroeconomic challenges that have exacerbated the company's struggles. "Our reliance on imported raw materials means we need consistent access to FX. Yet, transactions from as far back as 2020 and 2021 remain unresolved in the banks' books, despite providing naira cover. The banks are now demanding an additional ₦45 billion, a sum that is simply unrealistic given our current financial standing," Okunuga stated.
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Mr. Onu, the Managing Director of NECIT, further highlighted the broader issues plaguing the manufacturing sector, including the adverse impact of regulatory and tax-related challenges on production. He called for immediate government intervention to address the multiple hurdles facing the industry.
"The poverty rate and unemployment in Nigeria are overwhelming, and the manufacturing sector is crucial to reversing these trends. However, the current business environment, marked by regulatory overreach and punitive financial practices, is pushing companies like ours to the brink of collapse," the Financial Controller, Seyi Okunuga warned.
The NECIT leadership has reached out to the presidency, the CBN, and relevant regulatory bodies, seeking a resolution to these pressing issues. As the company continues to grapple with these challenges, the need for swift and decisive action from the government remains critical to preserving the manufacturing sector's role in Nigeria's economy.
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