It was another sad chapter in the life if Nigeria on Wednesday, as Innoson Motors, Nigeria’s main domestic vehicle assembly and Aero contractors, and Aero contractors airlines, have shut down.
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.
Also, Aero Contractors Airlines suspended flight operations and placed members of staff on indefinite leave of absence. Chief Executive Officer of the airline, Capt. Fola Akinkuotu, who disclosed this in a statement, said the development was part of the strategic business realignment to reposition the airline and return it to the path of profitability.
Akinkuotu said: “This business decision, which is a result of the current economic situation in the country, has forced some other airlines to suspend operations or out rightly pull out of Nigeria. ‘’In the case of Aero, the airline had faced grave challenges in the past six months, which impacted its business and by extension the scheduled services operations.’’ These factors, according to him, are both internal and external environmental factors that had made it difficult for the airline to continue its scheduled services.
He said during the period in review, Aero, which was hitherto revered for its safety and timeliness, witnessed epileptic operations and services to the external publics caused by non-alignment of fundamental issue of the business, which had been frustrating and embarrassing to all parties, including staff, customers and all stakeholders.”