Olakunle Olafioye, Henry Okonkwo and Peter Anosike
Nigerian importers who thought that the gradual restart of business activities in Wuhan, China, where the COVID-19 pandemic first started before spreading to over 200 countries and territories would not be long are now wondering whether they expressed this optimism too soon.
The decision of the Federal Government to put off the resumption of domestic flights tentatively scheduled to start on June 21, has poured cold water on hopes that international flights would have followed not too long after the resumption of domestic flights. Now, a gloomy cloud hangs over business concerns, especially as major cities that provide connection flights to China, Middle East nations and key Asian business centres frequented by Nigerian importers are still in different degrees of lockdown.
Various governments are still tinkering with the protocols for safe resumption of air travel in the post-COVID-19 era, signaling that the restart of flights will take some time.
Against this background, Nigerians who are into importation of goods have raised concern over the difficulties being encountered in replenishing their depleted stocks.
The outbreak of COVID-19 pandemic dealt devastating blows on every aspect of national life, including the economy, as well as caused apprehension over the survival of major businesses, particularly those that source raw materials from other countries.
A major importer of chemicals and Chief Executive of Osken Ken Chemicals, Dr. Kenneth Osanebi, who lamented over the situation expressed fear that several businesses may crumble before the end of the pandemic unless the government quickly intervenes to salvage the situation.
“The lockdown occasioned by the outbreak of COVID-19 has affected every aspect of business. In the first place, it has been very difficult getting goods across so, we only rely on what we have in stock. During the lockdown we were unable to operate fully, except for some chemicals that are considered essential. I am into essential chemicals like the ones used in producing sanitizer and water treatment. So, I had to come just twice a week for about two hours because my staff could not come in except those that had special pass, which we got through the Manufacturing Association of Nigeria, MAN.
“During that time there was no business because it was very difficult to get chemicals such as Isopropanol, which is used to produce sanitizer, even up till now. Goods are still coming in from the port. But the problem is that some of the countries where we get the goods from cannot even ship the goods. So, most of the goods ordered are still hanging. For instance, I have only taken just a single delivery since that time. There are definitely delays from both sides. The goods I ordered are yet to come. I know somebody who managed to get three containers, but within few hours, the stock was depleted. Because of that high demand, the product which was sold for N97,000 now sells for N240,000 per drum. The pandemic has shut the price up,” Osanebi said.
Added to the difficulties being encountered in replenishing stocks, Osanebi said, is the exchange rate. “It is very surprising to see dollar going up when we are now changing naira during that time. Normally, the exchange rate goes up when there is excess demand for dollar, but only few people are seeking to buy dollar, but in spite of that the rate has gone up and this is very surprising. So, the increase in dollar automatically affects the prices of goods and services.
“Because none of the goods I ordered for has arrived, we have to do what is called replacement cost. It means that if, as at today, the cost of buying an item is N100,000, but because of the dollar rate, if I am bringing it in and it’s going to come in next month it is going to be N120, 000. So that means, I have to stop selling what I have in stock at the rate N100,000 and start selling it for N120, 000 because if I don’t do that it will be difficult replacing my stock. So, we are looking ahead and trying to be proactive.
“So, if tomorrow we succeed in getting forex to bring the goods, we cannot sell the price we used to sell before now. So, the cost of replacing our stock is also an issue,” he said.
Expectedly, the situation has impacted negatively on patronage as the majority of the dealers lament inability to meet up due to diminishing capital. “If you had 10 customers before now, you can be sure that their number will reduce because some of them will not be able to meet up. I have discovered that within this period of lockdown, some businesses that had been struggling with their capital have started depleting their capital. The goods one used to get for N1 million may cost up to N1.5 million and if you have eaten N200, 000 from the capital, how are you going to meet up?” Osanebi queried.
He, therefore, advised the government to ensure stability in the exchange rate in order to avoid speculative pricing which worsens inflation. “The government should also put measures in place to save the economy. Right now, the increase in prices of goods and services will be borne by the end users because the producers will definitely shift the price to the consumers. So, at the end, we are bound to experience general price increase. And the genesis of this comes from two areas one of which is the exchange rate. Government should do more in playing its role in stabilizing the naira. If Naira is stable, then we will be able to project well.
“There are chemicals we can produce locally here, but unfortunately we have to rely on other countries, like South Africa before we get them. We should not concentrate only on agriculture. We can import what we don’t have, but in Nigeria it is sad that we rely on other countries to get everything, including from countries we have advantage over in terms of endowment.
“Look at what we call carbon black, for example; it is a product from the refinery and the type that the Nigerian National Petroleum Corporation (NNPC) produces is the best as far as I am concerned, but its production is not stable, so we have to rely on the one Germany produces which is very expensive or the relatively cheap one from China, which of course, has a quality lower than the type produced in Nigeria. It is only produced in Warri and I only got once last year, but this year I have not got anything,” he lamented.
In the same vein, Greg Maduforo, an importer at Tradefair Int’l Market, Lagos, bemoaned the devastating impact of the COVID-19 pandemic. “It has been hell for me. COVID-19 affected us so much. The cost of importation tripled because of the lack of air flights, so we pay double what we pay for custom duty. A cargo of about 1000kg from China to Lagos airport used to cost about $600, but now it costs about $2,000 because there are limited airlines in operation. Many of us are going bankrupt because of the exorbitant charges of the few airlines operating. I really don’t know what the future holds for us importers and Nigerians in general because everyone would be affected. Things have really gone bad, prices of goods would hit the roof in no distant future and I don’t know how I am going to cope with that, “ he said.
Another importer, Mr. Anthony Ubaka, also painted similar gloomy picture and complained bitterly that the high and unstable exchange rate has ruined his company. “Prior to the lockdown the exchange rate was about N321 per dollar, but the pandemic has disrupted everything for me because right now the exchange rate is above N400. Again we can’t even access foreign exchange because of the bottlenecks the Central Bank of Nigeria has put in place, which now only favours the rich people. I don’t know how I’ll sell my electrical goods now, because even though the markets have been opened, the demand for my goods has been very low. I am operating at a huge loss, so I have laid-off 80 per cent percent of my staff, “ he said.
Also, Mr. Onyeka Nwankwo, managing director of P. E. Jonatek Global Resources Ltd, is another importer whose venture has been adversely affected by the pandemic.
According to Mr. Nwankwo, aside from the increase in exchange rates, he, like other importers, finds it so hard to get foreign exchange because of the daunting conditions put in place by CBN.
“We importers are like orphans now. Our challenges are so much yet we are left on our own by the government. Right now the handling companies in Nigeria have come together to extort us, insisting that we importers must pay demurrage for the goods and cargo we left to obey the lockdown directed by the government. They say we must pay because we did not come to clear our cargo when a lockdown was in place. How can that be? They are only creating more problems for us.”
Speaking in the same vein, Azeez Abayomi Mustapha, a freight-forwarder and secretary of the Africa Association of Professional Freight Forwarders and Logistics of Nigeria. (APFFLON) told Sunday Sun that the aviation sector is in its biggest crisis ever, and suffering even more than most other economic sectors.
“We have never seen anything like this situation before. The last time we had something close to this was during the Second World War in 1939. Right now, many freight-forwarders are closing down because the industry has been paralyzed by the pandemic. Many cargo airlines, such as Etihad, are still in lockdown; we only have few bringing in cargo into the country. It has been really devastating for us all,” he said.
Mustapha said it would take them 10 years to recover from the devastation brought on them by the pandemic. “COVID-19 changed the global airline industry, both for airline passengers and cargo shipment, and believe me it will take about 10 years before things can get back to normal.”
He also cried out alleging that they are battling ‘double pandemic’, which he explained as the novel Coronavirus on one hand and the several inimical government policies that have made things so difficult for them on the other.
“Apart from crude oil and taxes, the combination of the aviation and maritime industries constitute the third major source of income for the government. We importers and forwarders make a huge contribution to the economy. So, it is a shock that we’ve been left on our own in these critical times. The government instead of coming to our aid is even making life difficult for us.
“Recently, the Ministry of Finance with the Central Bank of Nigeria (CBN) instituted this policy, Custom Code 4900, which directs that all air shipments must come with Form M and Pre-Arrival Assessment Report (PAAR). Our government now wants everything coming in through air to have a Form M. So with this policy, even a shipment of 1kg must have a Form M before it’s cleared. And to get this Form M at the banks takes several days and you’ll even need to have a SONCAP or NAFDAC approval before it’s issued at the banks.
“Already 80 per cent of goods that come in already have this Form M, but the government wants 100 per cent of these shipments to have a Form M. As far as air shipment is concerned, there are critical imports that do not need Form M to get cleared, for example, emergency medical equipment, fruits and vegetables, and even human remains (dead bodies flown in from abroad for burial). This policy would throw us into another pandemic in the industry. Because we will lose clients and our revenues would drop drastically. And many companies would be affected.
“I’ll advise the government to really pay attention to the freight forwarding industry. We need more government intervention in these sectors. The government should try to carry us along whenever they make some policies. We the practitioners wear the shoes and know where it pinches most. We’re becoming a laughing stock to freight forwarders in other countries. We export foods and fruits to other countries like the U.K and they make it so easy for us,” Mustapha said.
For the Chairman of Irukka Online Ltd, Ifeanyi Onwubiko, the sole distributor of Wharfedale, Mapex and Presonus musical equipment, they used the way billing system to sustain their businesses during the lockdown.
He, however, said that Coronavirus pandemic is the biggest challenge they have had since they came into business over 20 years ago.
He said the reason was that the major consumers of musical equipment: the churches and event centres were affected by the lockdown.
“Coronavirus is the ugliest business experience that I have had in my entire life. I used to import as many as five containers of musical equipment every month because we have branches in over 20 states of the federation. But since the outbreak of the coronavirus everything was put on hold. Even our sales fell drastically because our major customers were churches and event centers which were banned from operation.
“Since the lockdown, orders have been coming in trickles and we have been selling the ones that we had before. All our products come from the United States and Europe which were also affected by the lockdown. However, if there is a special order, we can get it through waybill. Even it is not every time that we travel for goods. This is a digital age. The world is now like a community. Whatever we need, we send email to our manufacturers, transfer money to them and they would send them to us.
“Irukka Online Ltd is a customer conscious company. We know that it is because of our customers that we open our showrooms on a daily basis. So, we feel what they feel. We share in their pains.We are conscious of the fact that Coronavirus affected the purchasing power of every individual and every organization in the world. So, we cannot afford to add to the problems of our customers. Apart from selling at the old price, we have even made delivery of products free. That is our own way of helping to cushion the effect of the Coronavirus on them. We just added three new vehicles to our fleet of delivery vehicles to make delivery hitch-free for our customers,” he said.
On his part, Chief Tony Okeke, the chairman and chief executive officer of Amano Investments West African Ltd, major representative of many clothing lines in Europe and America in Nigeria, especially Jeans materials, said that if one has trusted manufacturers in Europe, America or even China, one does not need to be travelling abroad always.
Okeke who is a graduate of Public Administration, University of Lagos, Akoka and president of Mandilas International Trade Center(MITC), Lagos International Trade Fair Complex, the hub of clothing materials in Nigeria, said that for the past two years, he has not travelled abroad for business because he has established trust and confidence with the manufacturers of his products abroad.
He said that the reason Nigeria was badly hit with scarcity of products was because of the time the C0coronavirus pandemic broke out.
According to him, January is always holiday period in China and as result they usually close their businesses and travel to their rural areas.
He said that Nigerian importers normally wait till February to start going to China, adding that it was before then that Coronavirus struck and threw confusion into the business community.
The market leader said that as a result of lack of importation, there are now scarcity of products in the market.
He said that the scarcity has led to marginal increase in prices because importers are conscious of the fact that Coronavirus has dried the pocket of most people.
“If you come to Mandilas International Trade Centre, Lagos International Trade Fair. We, the major importers are still selling at the old price because we know that there is no money in the country. My products come mainly from Europe and America and we are established so we don’t just wake up and increase prices. Again we are also consumer conscious because whatever affects them also affects us.
On how he has been restocking his wares, he said that even before the outbreak of Coronavirus, he was not used to travelling abroad for business.
According to him, he has established trust and confidence with his manufacturers, adding that all he does was send money to his manufacturers and they would waybill his goods to him down here in Nigeria.
However, he said that with the easing of lockdown both in China and other countries, things are becoming better.
His words: “You can see that containers have started coming into Lagos International Trade Fair complex. This is because the lockdown has been eased in China and the other parts of the world. Hopefully, before the end of the year, things would return to normal. So,those who are panicking should not. Everything would come to normal. All we need is to observe the Coronavirus protocols and all will be well”.
Also, Chief Chris Uzoma Okolo, managing director and chief executive officer of Chruz&Prif Services Ltd, importers of tyres, said that the Coronavirus pandemic has brought tyre business down to its knees.
“It crippled our businesses. Before the lockdown, we were already experiencing challenges because of the border closure because a lot of our customers come from outside Nigeria. Even as I am talking to you now, many containers carrying tyres are still wasting at Seme border. We made several appeals to the government to allow tyres to be passing because our business is legitimate. There is no law banning importing or selling of tyres in the country. So, the outbreak of Coronavirus just compounded our difficulties,” he said.
On how they are replenishing theirr stock during the lockdown, he said: “The truth is that there was nothing like replenishing of goods because the countries that we are importing tyres from in Middle East and Asia went into business lockdown immediately the World Health Organization warned about the danger of the disease.
“So, the issue of replenishing stocks during the lockdown was non-existent. I import my tyres from Lebanon and India and these countries were among the first to be hit by Coronavirus. So, they went into lockdown before us here in Nigeria. When Lebanon went into lockdown, I tried to import from India. The container arrived sometime in the month of May, but which was the thick of the lockdown, but when I got to the port, I was harassed by the security operatives. They asked me if I did not know that the country was in lockdown, why should I be doing business. You know their style. The more their harassment, the more the extortion. That is what Americans call thug theory. The bigger the thug, the more money he collects from his victims. After looking at the challenges of even clearing your goods when they arrive at the port, I decided to go home and wait until the situation improves.
“Another issue is that even if you clear your goods, there is no market. There is interstate border closure because Africa Tyre Village is the hub of tyre market in Nigeria and people from all the other states come to buy from us. But with the interstate border restrictions, they could not come. Those who are coming from the neigbouring countries can also not come because of the border closure, so those of us who have stocks were stuck with the products.”
He disclosed that there is marginal increase in the price of tyre, which he said is normal whenever there is scarcity.
“Some people went into panic buying immediately the lockdown was eased, but I feel that there is no need for that because India where I import from has opened businesses in their industries towns and they have started sending products. I have heard that the price of tyres have gone up. But it is not from here. We, in African Tyre Village, still sell at the old price. It could be those who buy from us who are taking advantage of the lockdown to maximize profit. Whoever, comes to African Tyre Village buys tyre at normal price,” he said.