Innoson Motors Hit the Rocks as Nigerian Economy Worsens


The scarcity of forex in Nigeria has crippled the operations of the country’s vehicle manufacturing company which may be forced to lay off workers.

According to Reuters, Innoson Motors which is one of the frontliners of the diversification of the Nigerian economy and also the patronage of local companies is set to fold up as the Nigerian economy bleeds helplessly.
The company management has also threatened to lay off workers who will be joining the 4.8 million Nigerians that have lost their jobs under the current administration in the last 15 months according to the data provided by the Nigeria Bureau of Statistics.

In an economy starved of dollars because of the slump in oil prices, Innoson Vehicle Manufacturing (IVM) cannot buy imported components, leaving the buses without engines – a metaphor for the problems afflicting Africa’s most populous nation.

GDP figures on Wednesday confirmed that the continent’s biggest economy slid into its first recession in 25 years in the second quarter, shrinking by 2.06 percent after a 0.36 percent contraction in the first three months of the year.

The poor state of the manufacturing sector in particular is a blow to President Muhammadu Buhari, who has been pushing hard to wean Nigeria off its dependence on crude oil sales, which make up 70 percent of government revenues.

At IVM, whose products are intended to show Nigeria can export more than oil, workers have already been sent home because of a lack of parts from Japan, China and Germany, which account for much of the content of the vehicles they produce.

Production had stopped “as we are waiting for the imported items for which there is a forex issue,” Chairman Innocent Chukwuma said at the firm’s plant at Nnewi, in southern Nigeria.

Launched in 2010, IVM last year raised its annual production target for 2016 from 4,000 to 6,000 vehicles due to a “Made in Nigeria” campaign that generated strong sales to the police, state agencies and churches.

Those ambitions are now looking shaky if promises of government assistance fail to materialise, Chukwuma said.

“I believe they are doing something but if they can’t do anything we’ll lay off some workers,” Chukwuma said.

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