Manufacturers hit by high  packaging cost

Nigerian manufacturers are hit by high cost of packaging their products.

Packaging costs have risen by 100 to 200 percent owing to foreign exchange scarcity in the Nigerian economy, say manufacturers.

Importation of packaging materials is almost becoming impossible as foreign exchange scarcity means they cannot bring in the needed quantity.

Local producers of packaging materials do not produce enough to serve medium enterprises and multinationals as they have been forced to cut down the volume of raw materials import due to foreign exchange crunch.

Noah Babatunde, the public relations manager of Nicapaco Limited, a producer of corrugated packaging materials, told BusinessDay that large enterprises such as brewers and tobacco companies no longer buy packaging materials as much as they did because of high prices caused by dollar shortage that has raised input costs.

“The problem is the cost of raw materials. Dollar exchange rate is high, so when we import inputs, prices of finished packaging materials become eventually very high. Most of these manufacturers are no more able to buy,” Babatunde said.

Two popular types of packaging are rigid and flexible packaging. Rigid packaging often has a relatively inflexible finite shape or form, while flexible packaging involves materials whose shapes can easily be changed or bent.

Most multinationals prefer flexible packaging because it is environmentally friendlier, sustainable, lightweight and cheaper.

Products are packaged with plastics, paper, glass, foam, and aluminium cans.

Like other manufacturers, energy crisis is also raising the production costs of many packagers in Nigeria as high gas price and power outages bite in industrial clusters.

Manufacturers spend more on diesel and fuel as power outages occur more than six times in a day in most industrial zones.

“The cost of materials is very high. Apart from foreign exchange, there is also the issue of tough business environment,” said Ike Ibeabuchi, a manufacturer.

Manufacturers and exporters in Nigeria have been accused of not following global trends such as green and smart packaging, digital printing and sensory packaging, which are more attractive to shoppers and environmentally sustainable.

This accounts for mass rejections of some of the Nigerian products in Europe and the Americas.

In order to avoid the continued repeat of rejections on the back of poor product packaging, Nigerian exporters are making huge investments with a view to chainging this perception in the global market.

Tunde Oyelola, chairman of Manufacturers Association of Nigeria Export Promotion Group, lamented that in a bid to ensure Nigerian products are packaged in the best form, exporters have had to spend more on packaging.

“One of the things government can do is to assist exporters by providing packaging incentives,” Oyelola said.

ODINAKA ANUDU