By CHIOMA OBINNA
As manufacturing companies in Nigeria continued to face challenges of poor power supply, the Managing Director and Chief Executive of SIMS Nigeria Limited, Chief Simeon Eyisi, has said that manufacturing will explode if the power sector reform agenda of President Goodluck Jonathan succeed.
Eyisi in a chat shortly after the official opening of Samsung Premium Brand Shop in Lekki, Lagos posited that there are thousands of good reasons why high cost of electricity should fall drastically in the country.
Eyisi who lamented the numerous challenges faced by manufacturing companies due to poor power supply said: “As with most enterprises operating in Nigeria, SIMS is bedevilled by the challenges in the environment, particularly epileptic power supply that compels companies to rely on diesel generators and the exorbitant cost of funds from the banks.
He further noted that customs duty regime does not favour local assembly of products from CKD (completely knocked down) parts as against fully built units imported in ready-to-use format.
Noting that current duty on CKDs was between 5 – 10 percent; Eyisi argued that if the government could increase this substantially, it would make more sense and encourage more local production of goods being imported at present. The immediate benefit if this, he said, will be increase in employment opportunities which will reduce social problems associated with unemployment.
“The high rate of interest charged by banks on funds they extend to businesses is another major headache that has become a migraine that hamstrings the operations of the companies and discourages new investments.
“Our two major challenges are energy and high interest rates. You cannot run manufacturing enterprise without electricity that is affordable. But we know that public power supply in Nigeria is a big headache. We have had to depend on running huge diesel generators to be able to produce. This makes the cost of production quite high and affects profitability. It does not allow companies here to compete with organisations that get funds at a cheaper rate.
“When we borrow at 18 percent from the banks, you know that you cannot compete with someone who got facilities at single digit rate like 9 percent. If the government could look into this, it will help manufacturers greatly. That is one thing the Federal Government and the Bank of Industry should critically look at and ameliorate the burden of manufacturers.
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