Manufacturers decry “tyranny of regulation,” urge Sanwo-Olu to resolve factory shutdown crisis

The Manufacturers Association of Nigeria (MAN) has issued a passionate plea to Lagos State Governor Babajide Sanwo-Olu, urging him to intervene in the contentious closure of several factories by the Lagos State Water Regulatory Commission (LASWARCO). The factories were sealed over alleged non-payment of water abstraction fees, a move MAN describes as both economically damaging and procedurally flawed.

In a detailed statement on Friday, MAN criticized LASWARCO for what it called an “insensitive and high-handed” approach to regulation. The association argued that the closures, coming amid the Yuletide season, were not only ill-timed but also indicative of a broader regulatory environment hostile to private enterprise.

MAN Director-General, Segun Ajayi-Kadir, disclosed that discussions with LASWARCO had been ongoing for months, with both parties reportedly nearing an agreement. “Only three weeks ago, another round of discussions took place between LASWARCO and representatives of MAN including affected member companies, which led to ongoing discussions in the companies as to the most viable option for addressing the alleged outstanding payments from earlier contested fees.

“It is while these discussions were going on and during the Yuletide that the Commission decided to cause this major and unwise shutdown of the companies,” he stated.

Ajayi-Kadir accused LASWARCO of undermining trust by acting unilaterally, adding that manufacturers were in the process of determining the most feasible solutions to the disputed fees.

The association warned that the closures threaten to destabilize the state’s manufacturing sector, exacerbating challenges already faced by businesses. According to Ajayi-Kadir, manufacturers are grappling with multiple cost pressures, including Water fees exceeding N100 million, borrowing rates surpassing 30 percent, a 250 percent surge in power costs, unsold inventory valued at over N1.2 billion nationwide.

He also cited an “excessive and overlapping” tax burden from various tiers of government, estimating that manufacturers face between 60 to 120 levies, alongside logistical challenges and insecurity.

Describing LASWARCO’s actions as a reflection of the “tyranny of regulation,” Ajayi-Kadir cautioned that such policies send negative signals to investors and could lead to widespread job losses. “Numerous taxes, fees and levies by the three tiers of government and non-state actors in some cases, numbering between 60 to 120 confront each manufacturer, not to mention the disruption of production activities due to insecurity and high cost of logistics,” he warned.

MAN called on Governor Sanwo-Olu to prioritize resolving the dispute by reopening the affected factories and facilitating the finalization of the MoU. Ajayi-Kadir concluded by stressing the need for a regulatory environment that supports, rather than stifles, economic activities.

“The possible loss of jobs and its attendant socioeconomic implications… should serve as a deterrent and encourage a business-friendly regulatory environment,” he said.

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