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Why industrial sector isn’t competitive, by operators


President, Nigeria Association Small Scale Industrialist, Solomon Vongfa (left); President, Nigeria Employers’ Consultative Association, NECA, Mohammed Yinusa; National President, NACCIMA, Iyalode Oluwaseun Alaba Lawson; President, Manufacturers Association of Nigeria, Engr. Mansur Ahmed, and President/Chairman of Council Nigeria Association of Small and Medium Enterprises, Prince Degun Agboade during the handing over of the Secretariat of organised private sector (OPS) from MAN to NACCIMA in Lagos.<br />PHOTO: FEMI ADEBESIN-KUTI

Among other challenges limiting the performance of the manufacturing sector, operators in the sector have attributed poor competitiveness in the industrial sector to mainly inadequate electricity, exorbitant tariff and high cost of moving goods across the states.

Specifically, the Manufacturers Association of Nigeria (MAN), stated that poor access to electricity remains responsible for the high cost of production in the industrial sector, which currently stands at 36 per cent.

Besides, the local producers added that the traffic gridlock at the Lagos ports occasioned by the dilapidated state and smallness of the roads, increase in business activities, unfettered access to the ports by all kinds of actors and absence of alternative routes remain a multidimensional challenge confronting manufacturers.

With about N117billion spent in 2017, and N43billion in the first half of 2018, alongside inadequate electricity supply and exorbitant tariff, operators in the sector note that high cost of alternative energy supply remains a huge challenge to local production.

“The implications are therefore high cost of production in the sector (the share of energy to total cost of production in the sector is 36% which is one of the highest in the world) and poor competitiveness of Nigerian manufactured products; high inventory of unsold goods; low production and low employment”, MAN added.

MAN President, Mansur Ahmed, however noted that local manufacturers will continue to advocate policies that will improve access to cheap sources of finance in order to ensure that locally produced goods remain affordable.

On the agenda for his administration, Ahmed said: “We shall be giving greater attention to measures that will substantially improve the contribution of the manufacturing sector to the Gross Domestic Product from the current paltry 9.5%.

“We hope to appreciably increase the capacity utilisation of member-companies by promoting policy consistency in a manner that the gains already made are not pulled back while ensuring the revival of sectors that are currently struggling”.

In a presentation to the International Monetary Fund (IMF), the local producers explained that power supply to the economy remains abysmally inadequate, with the country producing about 6000MW and can only wheel 4000MW due to the state and structure of transmission infrastructure.

“The power sector is beset with problems associated with the capital-intensive nature of electricity business; shortage of Gas; Domiciling of gas price in US Dollar for domestic consumption which subjects cost of gas to high variability and speculation as exchange rate moves.

“Poor location of generating plants; pipeline vandalism; obsolete, dilapidated & un-serviced electricity generation, transmission and distribution equipment, are other challenges of power in the country”, MAN explained.

On the state of the ports, MAN stated that the demand for port transmission and clearing services within the country notably outweighs the supply, which can be observed by the congestion experience at Lagos ports, therefore necessitating the need for rehabilitation of the ports in other locations in the country.

“Notwithstanding the challenges, the ease of doing business initiative and port reforms of the Government have led to some improvement in the Lagos port situation especially with; the trade hub, Pre-Arrival Assessment Regime, Fast track cargo clearing system and the deployment of technology to aid some aspect of trade facilitation.“The on-going establishment and development of the Single Window Platform need to be fast-tracked to further improve efficiency in service delivery and reduce human interface”.

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