Fidson Healthcare Plc, a Nigerian drugmaker, has lamented the rising cost of procuring raw materials that the pharmaceutical industry relies on, saying dollar shortage in the country is worsening the situation.
According to Imokha Ayebae, the company’s Head of Finance and Accounts, like other pharmaceutical companies, Fidson Healthcare Plc imports almost all of its raw materials, and is only able to access about 30% of its foreign currency requirements from the Central Bank of Nigeria (CBN).
Speaking further, Ayebae said for Fidson to meet its production demands, it often turns to Bureau De Change (BDC) operators, who leverages the company in its bid to procure required raw materials.
“It’s very tough,” Ayebae said, as he revealed that Fidson Healthcare, which produces cardiovascular, antiretroviral, anti-diabetic, and infusion drugs, incurred exchange losses of over N2 billion in 2021.
Why Fidson is experiencing dollar shortage
In the wake of COVID-19, Nigeria started to experience a drop in her oil exports, which accounts for at least 80% of her export earnings. So, to preserve the foreign exchange (FX) reserves amid the decline in crude demand, the CBN adopted a strict demand management strategy.
However, while the management strategy may have stabilised naira when compared to other country’s currencies in Africa, it has resulted in an acute shortage of the dollar and has consequently created a significant gap between the official rates and black market rates.
Meanwhile, Zainab Ahmed, the Minister of Finance, had hinted that naira, which traded N427.6 officially against the dollar on Friday, September 9, 2022, may weaken further against the dollar.
In an interview she had in Egypt, where she made this submission, Ahmed was quoted as saying “It will happen with time.”
Having made the submission that the Nigerian government expect that naira would weaken further against the dollar, the finance minister ruled out Nigeria taking on an International Monetary Fund program to address the country’s fiscal challenges, which include plummeting revenues and rising debt service costs.