‘Action ill-timed’ — MAN DG condemns closure of Coca-Cola, Guinness factories by Lagos

Segun Ajayi-Kadir, the director-general (DG) of the Manufacturers Association of Nigeria (MAN), has condemned Lagos state for closing factories belonging to Coca-Cola Hellenic Bottling Company, FrieslandCampina WAMCO, and Guinness Nigeria.

On December 24, the Lagos State Water Regulatory Commission (LASWARCO) sealed the factories for extracting groundwater for commercial purposes without proper authorisation.

The commission said it had been engaging with the three companies for over seven years, but they had either partially complied or failed to comply with regulations, prompting enforcement action.

In an open letter on Friday to Babajide Sanwo-Olu, governor of Lagos state, Ajayi-Kadir described the act as ill-timed, given the ongoing discussions between the commission and the association.

“The Manufacturers Association of Nigeria (MAN) is constrained to convey this open message to the Governor of Lagos State, as all attempts at approaching the relevant heads of agencies and ministry has failed,” the DG said.

“MAN is appalled by the inauspicious act of the Lagos State Water Regulatory Commission (LASWARCO) in sealing factories over their purported refusal to pay the astronomical and unjustifiable water abstraction fees imposed by the Commission.

“This action is ill-timed and quite unfortunate, as the Commission and MAN had engaged in meaningful dialogue and reached some agreements over the lingering issue about three months ago. This was expected to culminate in an MoU to commence in January 2025.

“Only three weeks ago, another round of discussions took place between LASWARCO and representatives of MAN, including affected member companies, which led to ongoing discussions in the companies as to the most viable option for addressing the alleged outstanding payments from earlier contested fees.

“It is while this discussions were going on and during the Yuletide that the Commission decided to cause this major and unwise shut down of the companies.”

Ajayi-Kadir highlighted the harsh economic climate, noting that industries are already burdened with significant challenges, including over N1.2 billion in unsold inventory, borrowing costs exceeding 30 percent, and a 250 percent rise in power costs.

He said manufacturers face multiple taxes and fees, adding that the high cost of logistics and insecurity further disrupt production activities.

“It is important to properly situate this inappropriate action within the context of the prevailing inclement operating environment in general and the downturn in the manufacturing sector in particular,” the DG said.

“A situation where industries are burdened with payments in excess of N100 million for generating water for production purpose, in the face of government’s failure to supply same, is unfair.

“The exorbitant fees and the untoward means of extracting payment exemplifies the negative impact of tyranny of regulation on private business.

“To date, manufacturers across the country are saddled with more than N1.2billion of unsold inventory, borrowing at more than 30% and struggling under a debilitating 250% increase in the cost of power.

“Numerous taxes, fees and levies by the three tiers of government and non-state actors in some cases, numbering between 60 to 120 confront each manufacturer, not to mention the disruption of production activities due to insecurity and high cost of logistics.

“There are more! So to add this oppressive water abstraction fee in Lagos state that may potentially be adopted by other States, presents an ominous and rancorous future for manufacturers in particular and private businesses in general.”

‘ORDER IMMEDIATE REOPENING OF CLOSED FACTORIES’

Ajayi-Kadir urged the governor to use his office to order the immediate reopening of the closed factories.

The DG said reopening the factories would facilitate a reasonable and actionable resolution of the ongoing discussions regarding the outstanding fees.

He said it would also allow for the finalisation of the pending memorandum of understanding (MoU) between the water commission and the organised private sector.

“This is more so that the private sector is currently awaiting the finalization of the text of the MoU from LASWARCO,” Ajayi-Kadir said.

“We are full of expectations that immediate action is taken in the interest of the state’s economy and to forestall a possible degeneration in the already tense business atmosphere.”

Ajayi-Kadir said the possible loss of jobs and its socioeconomic implications, as well as the negative signal it sends to investors, should serve as a cautionary factor and encourage a regulatory environment that supports businesses.