Lekan Aluko, with two decades of experience in Nigerian manufacturing, thought he had seen it all in an industry known for its challenges. However, the turmoil that followed the devaluation of the naira last year far surpassed anything he could have anticipated. The chief supply officer of Nigerian paint maker Chemical and Allied Products recalled the chaos of early 2024, when the currency was devalued for the second time in eight months, resulting in unstable foreign exchange prices that disrupted supply chains.
President Bola Tinubu’s reforms aimed to revive Nigeria’s economy and attract foreign investors, but the resulting currency volatility posed a new threat to the country’s manufacturers. Despite facing rising input costs and potential stock shortages, some companies used the devaluation as a catalyst to reduce their dependence on imported materials.
Nigeria’s manufacturers are now showing signs of stability. Many companies closed in 2023 due to economic conditions before and after the devaluations. International companies that once invested in Nigeria, such as Procter & Gamble and Unilever, scaled back due to macroeconomic challenges.
Under the previous administration, the naira was artificially pegged against the US dollar, causing a shortage of dollars and hindering manufacturers’ ability to pay for imports. The devaluations exacerbated the situation, leaving manufacturers struggling to purchase inventory in dollars with a depreciating naira.
Chemical and Allied Products now sources 90% of its calcium carbonate locally, saving significant costs compared to importing it. Other manufacturers have also increased their use of local raw materials, leading to greater collaboration across supply chains.
Beta Glass, a glass bottle manufacturer, found a way to reduce costs by working with international suppliers who import soda ash to Nigeria and invoice the company in naira to avoid foreign exchange risks.
Overall, Nigeria’s manufacturers are adapting to the challenges posed by currency fluctuations and rising input costs, demonstrating resilience and innovation in the face of economic adversity. Beta Glass felt like they were “working for the banks” in a country with high lending rates, using hard-earned dollars to source raw materials. The shift in the supply chain has presented challenges, with local suppliers struggling to meet the demands of big manufacturers due to issues like inadequate electricity infrastructure and poor roads in Nigeria. Despite these obstacles, executives are optimistic about a new tax law signed by Tinubu that could ease burdens on businesses. Successful efforts to localize the supply chain have proven beneficial, with the naira stabilizing and business confidence on the rise. Gendis expressed hope that they are moving in the right direction. sentence: The cat quickly ran across the street.
Rewritten sentence: The cat darted across the street with speed.