Unstable economy, ineffective ban on importation crippling furniture industry

Stakeholders in the furniture sector have lamented the impact of unstable policies of government and the ineffective enforcement of ban on importation of furniture as the bane of the industry.

They urged the government to encourage domestic producers by providing them with the enabling environment through soft loans, easy access to credit facilities, raw materials and empowerment with ‘power tools’. The experts want issues of infrastructural deficits, which increases cost of production to be tackled.

Illegal trading of international furniture products in Nigeria, they stated was discouraging local investors, as domestic manufacturers cannot recover the capital invested.

The Federal Government in 2004, under President Olusegun Obasanjo banned the importation of furniture into the country. The government said the decision was aimed at boosting local production and reducing Nigeria’s high demand for imported furniture. Subsequent governments also retained the policy.

Furniture items such as locks, steel legs, leather materials were on the list of 41 items banned from accessing Foreign Exchange by Central Bank of Nigeria from 2019.

But operators say that the ban hasn’t been effective as they alleged that it has been replaced with high tariff, which favour those who could afford imported finished furniture.

The world production of furniture is estimated at over $350 billion, out of which the Nigeria’s market share is about N50 billion, offers huge employment opportunities and potential to boost foreign exchange. Findings revealed that with improved enabling policies, countries such as China and Turkey, as of 2019 were producing 40 per cent of the whole furniture in the world with the revenue serving as a major source of income for their economies.

READ ALSO:  What Policy Changes, Other Challenges Hold For MSMEs In 2020 – Chief Economist, PwC

However, the industry in Nigeria is under threat owing to lack of patronage of locally manufactured furniture as some Nigerians prefer imported products, which are perceived to be more appealing with the aid of technology.

The Guardian found that the absence of organised local market for raw materials also impacts the cost of production. Manufacturers who need raw materials have to import them since they can’t access raw materials locally.

The president, Professional Carpenters And Furniture-Makers Association Of Nigeria (PCFA) Mr. Anthony Aluko said the era of unstable exchange rate has made life miserable for furniture producers, stressing that materials have become very expensive; adding that it’s not helping local production. Aluko stated that furniture production has become extremely expensive.

He said, “We observed that people are beginning to cut corners because customers are not ready to add money. For example we have what is called High Density Fibre (HDF) and Medium Density Fibre (MDF) used for displayed furniture to make them look nice. If you use HDF, the furniture will last longer but it’s 20 per cent more expensive. If MDF is used instead of HDF, there is no way the buyers could know but it’s not the best. But we have insisted that our members must use quality materials for their production.

“ To produce a ‘working closet’ previously, it cost about N35, 000 for the 4 by 6 size, but now if you are not doing it at N70, 000 the producer won’t make any gain. If nothing is done to assist producers, many people may exit the market in the next 10 years because operators are not making profits”

READ ALSO:  With Port Harcourt Refinery Rehabilitation Deal, NNPC Moves to Boost Nigeria’s Refining Capacity

He said the government should show more care for the 20,000-member association by introducing a policy whereby the Federal Government imports the raw materials and sell to local producers at a cheaper rate.

“ Government should impact positively on local furniture makers. We need grants, loan, power tools, import duty on furniture materials should be reduced and government should call the organisations together to know how it can assist the members and probably create an enabling environment to access raw materials easily,” he said.

The vice president, Lagos Furniture City, Mr. Michael Kalu who decried impact of imported furniture on local market urged the government to enforce the ban to save the industry

He said, “Implementation of the legislation with appropriate methods of enforcement will force traders to observe policies. The imported furniture is everywhere, what the present government did was to lift the ban and introduced higher tariff. If you can pay the high tariff, you can bring in furniture. What affects locally made furniture in Nigeria is importation.”

“There are some firms based in Dubai, China, Lebanon and other Asian countries. They now bring their production to Nigeria and start manufacturing but their production is not 100 per cent locally made. What they do mostly is to assemble here and most Nigerians would still buy it as foreign furniture. This affects locally made ones.

There is no time furniture was cheap, a set of furniture you get for N80, 000 before is N250.000 now. It’s just the economic factor, importation and unstable exchange rate as well as the quest to make profit by sellers that is escalating the price.”

READ ALSO:  CBN Advise Government To Adopt “Big Bang Approach” to Fixing Economy

Also speaking on the issue, a Lagos-based furniture manufacturer, Mr. Uzor Chukwu explained that prices of furniture are going up not necessarily because of the ban but due to the cost of materials.

According to him, before the COVID-19 pandemic, a yard of leather, sold for N650.00, but is now N1, 100, stressing that a set of chair that was sold for N100, 000 then has increased by over 50 per cent.

Chukwu said “During the pandemic, the planks that we bought at N850.00, is now N1, 900 yet, they are not foreign but local materials. For the foam used in production, this year alone, a producer has increased prices for more than seven times. Those are the challenges we are facing. The locks for beds, which are imported, the price has also skyrocketed. We are supposed to be smiling now but we are not because of the cost of materials. The exchange rate and the policies of the government, including devaluation is not helping at all.”

“The exchange rate is really affecting prices of imported furniture. Today, they will tell you that naira has added N2.00, tomorrow the man selling would add to its price. A particular television stand which I bought for N45, 000 two weeks ago is now over N47, 000.”

Source: Guardian