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To make Nigeria safe for entrepreneurship

By Editorial Board
19 February 2019   |   3:00 am
It is indeed curious that not many politicians and aspiring leaders have been talking about how Africa’s most populous nation (Nigeria) can lead Africa too as an entrepreneurial nation even in a general election year we just slipped into. Most political aspirants are expected to be talking about value and wealth creation within the context…

[FILE PHOTO] Entrepreneur

It is indeed curious that not many politicians and aspiring leaders have been talking about how Africa’s most populous nation (Nigeria) can lead Africa too as an entrepreneurial nation even in a general election year we just slipped into.

Most political aspirants are expected to be talking about value and wealth creation within the context of entrepreneurship and national development.

But not in Nigeria where aspirants and candidates harp only on how to fight corrupt people only without strategy to fight systemic corruption. They hardly talk about how to improve critical infrastructure that will trigger entrepreneurship that can lead to organic growth of tax nets.

And so one of the most critical needs of an entrepreneur is stable source of electricity.

This has been a source of reproach to governments over the years – from military to the current democratic dispensation. And that is why the Manufacturers Association of Nigeria (MAN) has never failed to stress this gap any time economic summits and development issues come into focus in the country.

Whenever the intractable electricity supply situation is tabled in the country, the industrial sector is among the hardest hit and this is part of the trouble with economic management in the country.

High cost of energy (power) has forced scores of industrial manufacturing plants across the country to close shop leading to mass retrenchment of workers.

What is worse, many multinational firms have relocated to neighbouring countries where better sources of power exist for manufacturing.

The few remaining firms are finding it extremely difficult to remain in business, a situation that does not augur well for the economy.

The MAN has not ceased from lamenting the ugly development. The body had on several occasions lamented the challenges they face which include inadequacy of physical and socio-economic infrastructure; shortage of skilled power; multiple taxes and trade malpractices like smuggling and fake counterfeit products.

Over and above this is low level of power supply, which remains a clog in the wheel of economic progress in Nigeria. How to overcome this challenge is daunting as attempts by government to remedy the situation have been unfruitful.

As the worsening power supply situation continues to take its toll on the economy, new data have shown that manufacturers in Nigeria spent a whopping N246.38 billion to generate their own power between 2016 and 2017.

The data compiled by the Manufacturers Association of Nigeria shows that the operators spent N129 billion in 2016 and N117.38 billion in 2017 on private power generation.

Another N43 billion was spent on private power generation in the first half of 2018.

In reviewing the performance of the sector in 2018, MAN pointed out that a situation where the cost of electricity constituted 40 per cent of the cost of production was not manufacturing friendly. It makes Nigerian goods not to be competitive.

According to MAN, “the challenge of inadequate electricity supply persisted in 2018, worsened by skyrocketing electricity price.

Inadequate electricity supply remains a major driver of the cost of production, noting that the challenges are coming from obsolete electricity infrastructure, weak transmission and distribution networks.”

Nevertheless, MAN commended the Federal Government for efforts aimed at utilising stranded 2,000 megawatts of electricity through the Eligible Customer initiatives introduced last year.

The association, however, regretted that the uptake of the stranded electricity was slow owing to the conditions established for its access.

It called on the government to relax some of the requirements for the uptake of the 2,000 megawatts stranded electricity so that manufacturers could leverage on the initiative.

And so the pitiable fate of industrial manufacturing in Nigeria is not in doubt.

With power challenges besieging the sector, the MAN has on many occasions in the past decried the industrial predicament. But little or nothing has been done to redress the situation.

For instance, not long ago, the Steel Manufacturing Group of the MAN threatened to shut down production over the high electricity tariff its members are forced to pay amid unending epileptic power supply in the country.

Citing lopsidedness, the MAN group warned that the new Multi Year Tariff Order (MYTO 2.1), which became effective on January 1, 2015, was paralyzing most companies in the country.

Which is why experts are saying it is expedient for the Nigerian Electricity Regulatory Commission (NERC), to go back to the old MYTO, which was initially scheduled to run till 2017 because the differential tariff from one DISCO to another has constituted a disadvantage to market players in terms of competitive sales.

Available statistics showed that while Nigeria is demanding N28.28 per kWh as minimum unit charge, other African and industrialised countries such as China, India, Russia, USA, Canada and Angola, demand as low as N21 per kWh as their minimum price.

The differential price among competing countries places the Nigerian manufacturers at a disadvantage.

It is noteworthy that low energy output is just one of the factors hampering industrial production in Nigeria.

There are other factors that interplay to frustrate manufacturing. Poor transport infrastructure, which includes lack of functional railway system for bulk cargo haulage remains a critical issue, which our leaders are not putting on priority list.

A lot has been said about revamping the railway system since 1999 without much success.

In the absence of railway and waterway transportation, the entire haulage sector is dependent on the highways.

Unfortunately, the highways are dilapidated and decrepit. Rather than enhance industrial production, they increase the unit cost of goods. Time, money and lives are regularly lost on the nation’s highways.

This newspaper believes that it is high time leaders at all levels in Nigeria began to pay attention to alternative and renewable energy sources.

There are modern technological feats that leaders can lead the people to invest in at the moment.

All told, there should be more attention to development of critical infrastructure generally.

We may have missed the rare opportunity in the just concluded campaigns for political offices as not many prominent candidates have released any blueprint on how Nigeria can be an entrepreneurial nation. But the MAN should continue to sustain its campaigns on how to be an entrepreneurial nation and look beyond oil and gas revenue sources.

That is the way for government to redress the factors that have been hampering industrial production in the country. We should not get it twisted: economic growth will continue to be a mirage until we become an entrepreneurial nation.

Nigeria needs to be an entrepreneurial nation where small and large businesses are spurring innovation and growth.

The nation needs to overcome critical infrastructure deficit and start manufacturing to be like lower-cost factories in China and Brazil, which are part of BRICS countries.

Manufacturing is so important to our national security and future – to keep the best jobs, companies, and opportunities in the country.