Label goods produced abroad 'made in Nigeria'Shut production lines, sack NigeriansTHIS is not the best of times for the real sector in Nigeria as manufacturing and construction firms, weighed down by huge cost of production, are doing the unethical to survive.Unknown to unsuspecting Nigerians, especially those who relish some beverages, cosmetics, household items and certain drugs, they are being given less than the wholesome picture of the goods they consume.In their alleged bid to remain in business under Nigeria's harsh operating environment, a sizeable number of local firms and conglomerates have resorted to outsourcing the production of their goods to their subsidiaries in some neighbouring West African countries or parent companies in Asian and some European blocs.Ordinarily, this survival strategy often adopted by companies worldwide would not have attracted any curiosity but for the way and manner the affected companies go about it.Across the country, The Guardian learnt that most industrial concerns, which outsourced the production of their goods to foreign firms, bring them into the country as 'Made in Nigeria.' Others, which are more sophisticated in this ignoble trade, simply labelled such popular brands as 'Packaged in Nigeria, Prepared in Nigeria' or 'Made in Ghana for Nigerian market.' Except in a few cases, the goods are of poor quality.It was also learnt that these goods are brought into Nigeria from Europe and Asia through its porous borders and some national gateways to avoid paying the appropriate import duties to the Nigerian government.The Guardian also learnt that it pays most firms to produce their goods in some ECOWAS countries through outsourcing and ship them into country for sale at affordable prices.When The Guardian visited some supermarkets and shops in some major markets in Lagos and some state capitals, it discovered that some beverages, drugs, textiles and building materials, which before now were labelled 'Made in Nigeria' had been repackaged as 'Prepared in Nigeria' or 'Packaged in Nigeria.'Some officials of the companies involved in the practice kept sealed lips when The Guardian contacted them for comments on the rationale behind it. It was however learnt that it was one of the 'coping mechanisms' they have adopted to survive in Nigeria's harsh business environment.A source said 'it is one of the ways to reduce huge operating costs arising from decaying infrastructure, wage bills, huge debt profile, and insecurity.'As the practice spreads across the economy like lava from a volcanic eruption, it is also sweeping Nigerians off their jobs as most production lines have been shut and the personnel disengaged.For the firms, which bring finished goods into the country for packaging, they only maintain a healthy workforce in the packaging and marketing or sales lines.The Guardian learnt that a worried group within the Manufacturers Association of Nigeria (MAN), which sector is worse hit by the antics of the firms, wrote a petition to the Standard Organisation of Nigeria (SON) and the Nigeria Customs Service (NCS) about a company based in Calabar, Cross River State, which is notorious for labelling foreign goods 'made in Nigeria.'In the petition, the group claimed that the firm located in the Free Trade Zone (FTZ) brings into the country foreign products but labelled them 'made in Nigeria.'According to an official of the group, the affected supervisory agencies alleged that they could not wade into the matter because it was outside their jurisdiction.Recently, the Senate Committee on Federal Capital Territory (FCT), which faulted the use of foreign materials instead of local ones in the rehabilitation and expansion of the outer Northern Expressway Lot 11 in Abuja, was told that the suppliers were selfish with the truth by claiming that they were Nigerian goods when they actually came from overseas.The panel's chairman, Smart Adeyemi, had queried the alleged inflation of the contract to N16 billion by the CGC Engineering Limited, the Chinese company, handling the project.But the firm's Construction Manager, Jiang Kieng, who gave reasons for the action and asked more time to complete the road, said the decision to import the materials was due to the management's discovery that even the so called local goods came from outside Nigeria.Kieng said the government approved the firm's request to import the materials.An industry player said the attitude of the Federal Government towards poor infrastructure, multiple taxes and other sundry charges, and the states, which do anything under the guise of internally-generated revenue, have made Nigeria unfriendly for businesses and possibly forced the firms into the unethical practice.He said it might also be informed by the companies to partake in some of the bailout incentives the government had packaged for the real sector.The official lamented that as the harsh economy bites, multinational companies, which could no longer cope, have relocated their businesses. The firm's chief, who urged action against decay in infrastructure, poor tariff structure, corruption, and growing insecurity, said it amounted to double standard or insincerity for the government to be wooing foreign investors where the conditions on ground are disincentives to investment.The Guardian also discovered that most blue chip companies with vibrant subsidiaries in some neighbouring countries would rather have their products manufactured there and shipped into Nigeria.Two of the multinational companies located in Ilupeju and Ikeja areas of Lagos are allegedly producing their goods in Ghana but label them 'Made in Ghana for Nigerian market' with their local addresses on the packs.Some of the products with such bold prints as 'Packaged in Nigeria' and 'Prepared in Nigeria' are beverages and drugs.Ironically, while multinationals are leaving Nigeria for smaller countries with more reliable infrastructure, Nigeria with huge consumer population now remains their target for finished goods.A source alleged that a firm in the Calabar Free Trade Zone, had been importing finished products into the country with 'Made in Nigeria' label.The source told The Guardian that the company does not produce 'anything in Nigeria,' but imports its brands from outside and sell at cheaper rates to remain afloat.According to him, the company has about nine warehouses, with three machines for folding, drying and dying.He added: 'In the other five warehouses, they have imported products from other African countries. Eleven 40-feet containers were offloaded as at the time I visited the warehouses. The administrative block was not in operation, except one office that is used as customers' waiting room. All the workers in the company are Chinese.'The official alleged that SON and NCS did not intervene in the situation when it was reported to them because 'the FTZ where the company operates is outside their jurisdiction.'When contacted, the Director-General of SON, Joseph Odumodu, confirmed this, when he said: 'There are laws guiding the activities of the operators in Free Trade Zones, which do not permit us to monitor their activities within the zones.'He added that the agency would not hesitate to embark on necessary measures that would ensure that any product brought into the country, which failed to meet the required standard, was seized and the perpetrators prosecuted.Also, the Director-General of MAN, Jide Mike, said that the association was yet to get any report of such activities by some manufacturers.Its President, Kola Jamodu, said it had not been brought to his knowledge that some manufacturers were engaged in such acts, adding that 'the association is strongly against such practices.'But the Chairman, Pharmaceutical Manufacturers Group of MAN, Bunmi Olaopa, who exonerated his members from the shady deals, said: 'This situation applies to importers. Nigerian pharmaceutical manufacturers are not outsourcing production lines rather we have excess capacity. The next steps is to increase contract manufacture for importers by local manufacturing to increase capacity utilisation from current level of four per cent as well as technology transfer.'Similarly, the Executive Secretary, Paints Manufacturers Association of Nigeria, Jude Maduka said: 'I am not aware of such practice by paint manufacturers. It does not exist in the sub-sector.'The impact of the outsourcing style is already felt in the country as many companies have scaled down operations and restricted their activities to what they described as 'core areas.' The victims of this development are usually Nigerians who lose their jobs.Recently, FrieslandCampina WAMCO Nigeria, makers of Peak, Three Crowns and Friso brands of milk terminated 56 members of staff and unveiled plans to outsource its non-core operations to experts.In a statement, the company's Corporate Affairs Manager, Mrs. Ore Famurewa, said that the firm ensured that due negotiation was done and the restructuring fully aligned with the National Union of Food, Beverage and Tobacco Employees as well as the Food, Beverage and Tobacco Senior Staff Association on redundancy packages.The re-organisation, according to Famurewa, would enable the company focus on its core dairy business.Two weeks ago, former Central Bank of Nigeria (CBN) governor, Prof. Chukwuma Soludo, said at the yearly general meeting of Nigerian Association of Industrial Pharmacists (NAIP) in Lagos that the 'pharmaceutical sector is a struggling industry. Some of the existing firms have resorted to a number of 'survivalist strategies' by joining the 'trading train'- as marketers for foreign firms or have outsourced their production to Indian and Chinese manufacturers while they are more amply rewarded as happy importers.'I will not be surprised if out of your 300 corporate members, more than 60 per cent are in the marketing/distribution segment.'Local manufacture has been consistently losing market shares in the local market let alone being competitive in the international market. If you adjust for the outsourced production to foreign firms, the 100 or so largely small and fragmented companies in the industry account for about 20 per cent of domestic drug consumption,' he said..President, Nigerian-American Chamber of Commerce, Mazi Sam Ohuabunwa, said a regime of robust incentives, garnished with rule of law, under an open economic system, holds the ace in attracting investors to Nigeria.
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