The Manufacturers Association of Nigeria (MAN) has issued a strong rebuke of the Lagos State Water Regulatory Commission (LASWARCO) for its recent closure of several factories in Lagos State. The closures, stemming from alleged non-payment of water abstraction fees, have been condemned by MAN as unwarranted, ill-timed, and detrimental to both the state’s economy and the manufacturing sector. The association has appealed directly to Governor Babajide Sanwo-Olu to intervene and order the reopening of the affected factories, emphasizing the negative impact of such actions on the business environment and the potential for job losses.
MAN contends that the factory closures are particularly egregious given the ongoing dialogue between the association and LASWARCO to resolve the disputed fees. According to MAN Director-General, Segun Ajayi-Kadir, these discussions, initiated three months prior, had yielded some agreements and were progressing towards a finalized Memorandum of Understanding (MoU) expected in January 2025. Just weeks before the closures, further discussions took place, indicating a willingness from both parties to find a mutually acceptable solution. The decision to seal the factories during the Yuletide season, a period of increased economic activity, underscores the perceived insensitivity of LASWARCO’s actions, according to MAN.
The heart of the dispute lies in the level of water abstraction fees imposed by LASWARCO, which MAN deems astronomical and unjustifiable. Manufacturers are already grappling with a multitude of financial burdens, including high borrowing rates exceeding 30%, a 250% surge in power costs, and an overwhelming array of taxes, fees, and levies imposed by various levels of government. Ajayi-Kadir highlighted the significant financial strain on manufacturers, citing unsold inventory exceeding N1.2 billion. He argued that LASWARCO’s aggressive approach to fee collection, coupled with the existing economic pressures, exemplifies the “tyranny of regulation” hindering private sector growth.
MAN’s appeal to Governor Sanwo-Olu underscores the broader implications of the factory closures. The association warns of potential job losses and further destabilization of an already fragile business environment. Such actions, MAN argues, send negative signals to potential investors, undermining efforts to attract investment and stimulate economic growth. The timing of the closures, during the festive season, amplifies the negative impact on businesses and their employees.
The association emphasizes the ongoing nature of the discussions with LASWARCO, highlighting that the MoU was in the process of being finalized. MAN is awaiting the final text from LASWARCO, indicating a commitment to resolving the issue through negotiation rather than confrontation. The closure of the factories, therefore, appears premature and counterproductive to the ongoing efforts to reach a mutually acceptable agreement.
MAN’s plea to Governor Sanwo-Olu is a call for reasoned intervention and a demonstration of support for the manufacturing sector. The association believes that reopening the factories is a crucial first step towards de-escalating the situation and fostering a more conducive environment for resolving the dispute. By intervening, the Governor can signal a commitment to supporting the private sector and fostering a regulatory environment that encourages growth and job creation, rather than stifling it. The situation demands a balanced approach that recognizes both the need for regulatory compliance and the importance of supporting businesses facing significant economic challenges. A resolution that allows for continued operations while addressing the fee dispute would be a more productive outcome for all stakeholders involved.
