NECA Seeks End to Business Closures
Chris Uba
Nigeria Employers’ Consultative Association (NECA) has expressed regret at the recent suspension of operations of Greif Nigeria Plc and a host of other manufacturing companies in the country, saying that the action does not augur well for a country in dire need of rapid economic transformation.
The Director General of the association, Mr. Timothy Olawale, who stated this in a press statement said “it is disheartening to receive the news of the closure of the factory plants of the company in Delta and Kaduna states and ultimately the suspension of operations in Nigeria,” adding that “this brings to fore the challenges businesses are faced with in Nigeria.”
“It is not enough for government to invite private capital from overseas, businesses already operating in Nigeria should be given all the necessary support to thrive and mitigate the effects of the inhospitable business environment,” he added.
While commending govern- ment’s efforts at improving the Ease of Doing Business (EODB) in Nigeria, he averred that “beyond the many other parameters used to gauge the success of the EODB, one critical parameter is how competitive existing businesses are. We cannot lose sight of the many businesses facing the death knell and several others like Greif Nigeria already losing the battle for survival.”
Commenting on the dangers inherent in business closures, the NECA boss noted that “Business closures have greater consequences for the nation as a whole as more Nigerians would join the labour market.
“Beyond the income of families being truncated, unemployment figures increased and social malaise going out of hand, Government’s ability to generate income through Company and Personal Income Taxes will be reduced.”
While suggesting a way out, Olawale stated that “government should double its efforts at creating conducive operating environment for businesses to thrive.
“There is no reason why interest-free loans, bail-out grants or tax holidays should not be given to businesses that have been certified as being on the brink of extinction.
“A critical look at regulatory high-handedness and lawlessness that tends to stifle businesses is highly overdue if the nation does not want to have many other businesses closing down in few months”
Greif Nigeria Plc was incorporated as a limited liability company on January 20, 1940, with the name, Metal Containers of West Africa Limited.
The name was subsequently changed to Van Leer Containers (Nigeria) Limited on July 4, 1969, and then, Van Leer Containers (Nigeria) Plc. It became “Greif Nigeria Plc” by a special resolution on May 12, 2004.
The Chairman Adebayo Olowoniyi of the company disclosed in its 2018 full-year statements released last week that the company had decided to suspend operations in the country.
He said that the company had been operating well below operating costs, even below direct material costs, and sees no signs of improved market conditions. Therefore, “we have decided to stop operations with immediate effect. The coming months we will investigate on if and/or how we can continue with Greif Nigeria.”
Adedayo, also revealed that the company had tried to stay afloat through price increases and embarking on cost reduction initiatives.
Halfway through its financial year, Greif Nigeria Plc lost a key customer and had to reduce prices to retain volumes, leading to an under-recovery of costs.
The company in June last year, had notified the NSE of its intentions to shut down its operations in Koko, Delta State, and Kaduna State.
Results for the twelve months ended October showed that its revenue fell from N1.4 billion in 2017, to N534 million in 2018. The firm recorded a loss before tax of N245 million in 2018, as against a profit before tax of N77.5 million in 2017.