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Increased import-dependence, de-industrialisation diminish Nigeria’s celebration at 49

By Guardian Nigeria
30 September 2009   |   4:16 am
THAT the world's eighth largest oil producer has a pitiable industrial sector speaks volumes on quality of Nigeria's leaders, especially since the era of Structural Adjustment Programme (SAP), when phenomenal de-industrialisation crept into the nation's economic set-up. The statistics are indeed appalling.

According to the Manufacturers Association of Nigeria (MAN), an average of seven industrial outfits per month close shops at one time or the other within the past decade.


Presently, the sector contributes less than five per cent to the country’s Gross Domestic Product (GDP) from about 13 per cent in the early 1980s.

Today too, there is no tyre manufacturing country in Nigeria, no thanks to the highly disenabling operating environment that led to the exit of Michelin Nigeria Plc and Dunlop Nigeria Plc from the country. Yet, the de-industrialisation trend is yet to abate as its reasons are yet to be effectively addressed.

These include the poor power supply, unfavourable Naira exchange rate and tax regime, the high cost of industrial input, policy inconsistency, poor road network and a host of others. Of all these constraints, only power supply has attracted the desired response from government, according to industry chiefs. And even at that, all that the government claimed it could guarantee by the end of the year is an increase of power generation from the existing less than 4,000 megawatts to 6,000. That promise has even been described as unrealistic by operators, who also said that even if the target is achieved, would still be insufficient to meet the power supply needs of the industrial sector. Hence, today, 49 years after independence, Nigeria remains an import-dependent nation.

From industrial goods like machines, to housing essentials like cement, down to simple things like toothpick, huge foreign exchange transactions remained the order of the day to meet local demands for various goods. Even oil-the mainstay of the economy- is presently imported.

Yet, stakeholders have not relented in sending warning signals that unless government provides bail-out measures and accord the industrial sector priority attention- in real terms, many more firms would still close shop.

Just last week for instance, worried by the spate of industrial fatalities, Ogun state branch of MAN canvassed between five to Seven year tax holiday as an imperative to stimulate investment in the industrial sector. Some other suggestions were proffered by the operators and indeed by other stakeholders on how to move the sector forward. Hence, as the nation celebrates its 49th year independence tomorrow, the verdict of local manufacturers is that there is nothing to cheer about.

To the Commerce and Industry Minister, Chief Achike Udenwa, however, patience is what is required. Not long ago, the minister proposed a N500 billion bail out fund for the industrial sector, details of which are still being awaited. This has however been dismissed by many who wondered what had become of the textile revival fund promised since 2006.

Udenwa insisted however that with the ministry’s commitment to industrial revival, demonstrated through increased collaboration with the private sector and international organizations, there is hope for the sector.

Interestingly, MAN president, Alhaji Bashir Borodo, shared Udenwa’s optimism.

According to Borodo:” It is true that 49 years after independence, we re not doing well, though the potentials are there. But, we should not give up. Democracy is a key component of our aspirations as a nation. And we’ve had that for 10 years now. So, the rest will follow, God willing. Whatever we are unable to get from Abuja, we can get from Lagos, Gombe, Ilorin and a few others who are breaking new grounds. So, there is hope”.

Some are too pained to be optimistic however. For instance, the Managing Director of Nigeria Wire & Cable, Mr. Lateef Bakare told The Guardian that the company suffered double tragedy in the last one year.

According to him, the sector had continued to suffer from weak consumer demand and devaluation of the naira, which he said had resulted to increase in the price of raw materials.

He therefore called on the Federal Government to, before its 50th independence anniversary, develop a well sort out bail out fund for the industrial sector to enable it bounce back.

Bakare said that the industrial stimulus funds, which the government promised to release for the bailing out of the industrial sector, should be released to those who actually need them. He also canvassed the enhancing of the disposable income of Nigerians to increase consumer demand of manufactured products.

He added: “Contractors that have done jobs for government should be paid on time, government should review the wage structure of employees and made the business environment more conducive so that the sector would be able to create more jobs to for the unemployed.”

Bakare stressed the need for government to move fast in solving the country’s energy crisis to reduce the number of companies finding their way to Ghana.

He urged government to empower appropriate regulatory agencies to enable them deal with the issue of smuggling of substandard goods into the country.

Also, the Managing Director of Winners Pharmaceuticals, Mr. Joe Okpara said that owing to the harsh operating environment, the company had resorted to skeletal production.

According to him, there is nothing much to celebrate as the company has been having lots of challenges, most especially energy.

He lamented: “As I am talking to you now, we have experienced energy failure for more than seven times. Even when the Power Holding Company of Nigeria (PHCN) decided to give us electricity, it does not normally last for more than five minutes and this has hampered production.”

Okpara decried the company’s inability to get credit facility from the banks to revive the company.

“The banks are not giving us loans. I am contemplating quitting manufacturing to embark on importation of finished goods and waiting for things to improve before going back to manufacturing. It is not easy because we still need finance to do that. We cannot even relocate to Ghana as some other companies have been doing; this is also because of lack of finances. If it were in those days, we would have sold our factory here in Nigeria, relocate to Ghana and get free land to start all over again. And again, we cannot do that because I don’t think anybody will be willing to buy any manufacturing factory in Nigeria.”

He urged government to try as much as possible to reduce the seven point agenda to one point agenda by focusing only on providing electricity for the masses and manufacturers.

“It costs five times more to produce here in Nigeria than anywhere in the world. We have problem from federal, state, and local government. All these arms of government should begin to do their own part in moving the country forward.

“I think they should begin to take a cue from what is happening in other parts of the world. The former President of USA, Bill Clinton, took a loan to buy a house after his tenure as president. But here in Nigeria, you will see local government chairmen acquiring private jets,” he said.

He attributed the Niger Delta crisis to the inability of the government to provide the basic needs of the masses.

. Corroborating Okpara, the Managing Director of Wemmy Industries Limited, Mr. Oloye Toluwani Oluseun said that the company has not felt any better in the last one year. “As I am talking to you now, we are on generator. Also, we have been having problem in getting loans from the banks. We cannot do much as a manufacturer without getting credit facility from banks. We have tried severally to secure loan from banks since the beginning of this year to no avail,” he stated.

He urged government to come to its rescue as production costs kept on increasing unnecessarily.

By Babatola Adeyemi and Roseline Okere