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Stemming importation, encouraging production


nigeria ports authorityWORRIED by the extremely low capacity utilisation in the Nigerian manufacturing sector, caused by huge importation of goods that could be produced locally, the Bank of Industry (BoI) has appropriately advocated the expansion of protectionist policies for indigenous producers to save them from extinction. Most companies in Nigeria, after all, are merely struggling to remain in business due to competition with imported cheaper goods. Nigeria is, embarrassingly, a dumping ground for all kinds of imports ranging from second hand goods to new ones and from disused ones to even toxic others. The result, of course, has been a complete erosion of the homegrown capacity to produce and a sabotage of the nation’s interest. Which is why policies are needed to protect local industrial manufacturing in the country and create jobs.

Managing Director of BoI, Rasheed Olaoluwa had, while on a facility tour of an indigenous manufacturing company, raised the issue of how heavy importation is threatening local manufacturers. According to him, local producers have the capacity to meet local demand and end the reliance on foreign goods and that a major strategic step Nigeria can take towards achieving this is to protect local firms. To accomplish that, Olaoluwa suggested the enactment of protectionist policies in favour of local production of goods as well as other incentives for them.

The BoI boss also lamented that importation is one reason the nation’s foreign reserve is under pressure.
The Bank of Industry helmsman also toured a steel and ceramics production company which converts steel billets to wire mesh, nails and other finished products, the first of its kind in Nigeria, and said under his proposed industrial policy framework, such companies with the capacity to produce items locally should be given necessary support and patronised. He said that supporting companies would scale up human resource capacities and curtail exportation of Nigerian jobs to other countries. With this, the Nigerian Industrial Revolution Plan would be meeting its objectives and the nation’s industrialisation would begin in earnest.

While appealing to manufacturers to patronise each other in terms of locally processed raw materials and production machinery, Olaoluwa disclosed that BoI was at the verge of launching a renewable off-grid electricity concept that would be commercially viable. The Ministry of Power, he said, is assisting the development bank to secure licences for its take-off.

It is re-assuming that the push for protecting local manufacturers and curtailing imports is coming from a development bank like BoI which has local manufacturing as its focus. A lot has been said over time about the destructive culture of heavy importation, whereby the country relies almost entirely on imported goods including such common things as toothpick, toothbrush, toothpaste, stationery and so many basic items that could be produced locally. This unhealthy trend leaves local producers of these items in danger because the imported ones are often far cheaper than the locally produced ones especially because the cost of producing them locally is astronomical. The result is a warped economy in which the nation’s foreign exchange reserve is often depleted.

An industrial protectionist policy as being suggested would, therefore, form part of the framework of solutions. Luckily, the Goodluck Jonathan administration has proposed an Industrial Revolution Plan that seems to include the latter and the spirit of industrialising the country. What is left is its implementation, especially, in the face of poor electricity supply that has truncated industrial development. From this point of view, the renewable off-grid electricity plan to be launched by BoI is a laudable scheme that should be pursued. There is no doubt that lack of electricity remains the single most critical element hampering industrial production in Nigeria.

The resort to importation, unfortunately, has plagued the country and helped to kill local capacity. Gone are the days when different manufacturing industries flourished across the length and breadth of the country. For automobile, there were such car assembly plants as Leyland, and Steyr, Peugeot and even Volkswagen of Nigeria with substantial local content.

And the textile industry in Nigeria was one of the largest employers of labour. Among other things, industries collapsed as the power supply situation in the country dwindled and policies changed. The nation has built direct steel production plants that are hardly functional and failure of policies have contributed to creating a consumer nation instead of a producer. Even people who want to embark on agricultural production have problems processing and storing their products.

As it is now, reviving the industrial sector is a must for Nigeria. There are investors who are desirous to resuscitate the comatose industries but who can do nothing without steady power supply and an enabling policy environment. So Nigeria must get its priorities right in order to take the necessary leap into industrialisation.

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1 Comment
  • emmanuel kalu

    yes nigeria needs that to help grow their industrial base and build capacity. but that is not the only thing they need. they need power to power their machines. they need good road and transport to move goods and labor. they need fair laws, less corruption, cheaper funding and most of all clear and precise policy by the govt. we can make huge leap if the govt get more involved. for example. the govt has to insist that any contract given by the govt should include over 70% local material and ever 90% labor. no contract should be given to purely foriegn companies. importation quotas should be greatly reduce and taxed heavily. our auto policies have being made, how many nigeria made cars does the govt use or purchase.