Nigeria’s failing economy takes its toll on industrial estates

One of the starkest reminders of the misgovernance of the nation by past leaders was the seemingly deliberate effort to stifle the industrial sector that was expected to tackle unemployment.

As many analysts now agree, Nigerians’preference for imported goods has also weakened the few existing industries, making some of them exit the nation’s landscape for other West African countries.

One of the most stringent criticisms against Nigeria’s industrial policy is its inability to reform the sector and provide succour to the existing and dying industries. Hence, the ugly state of industrial estates created in the 70s to take care of rapid urbanisation, industrialisation and commercialisation in the country.

The industrial sector in Nigeria (comprising manufacturing, mining, and utilities) accounts for a tiny proportion of economic activities (six per cent) while the manufacturing sector contributed only four per cent to Gross Domestic Product (GDP) in 2011. This is despite policy efforts, over the last 50 years, and, in particular, more recently, that have attempted to facilitate industrialisation.

But available data from the Bureau of Statistics (NBS) 2017 revealed that national industrial utilisation is approximately 40 per cent, while in 2018, according to a real estate report by Ubosi Eleh and Company, many warehousing facilities were thrown into the market for outright disposal, few takers as firms and owners continue to seek creative ways to remain in business.

The development of new warehousing either as an investment or for additional storage space still remains limited. The major industrial areas in Ikeja, Oregun, Illupeju, Apapa, Amuwo-Odofin in Lagos, Idu in Abuja, Trans Amadi in Port Harcourt and Bompai in Kano have witnessed low warehousing activities as many of them have been converted to other commercial uses or completely abandoned. In the northern parts of the country particularly Kaduna, the demand for warehousing is virtually non-existent.

For instance, the headquarters of the Dunlop Nigeria Plc, once a beehive of business activities, has become a ghost of their old selves. The case of Dunlop property is a definition of the new role the Lagos industrial community has been given.

The same goes for Iganmu, another ancient industrial layout. Apart from the portion controlled by the Nigerian Breweries Plc, the area has lost its past glory.

With the collapse of the Central Bags Manufacturing Company Nigeria Limited and several other operators that clustered around it, the entire famous Akanbi Onitiri Street has become a shadow of itself.

While the faint industrial activities are still in some other areas, developers have converted most of them to other uses. The same decline could be seen at Ijora, Isolo and Mushin industrial settlements. Abimbola Street and its environs, were the hub of the Lagos plastic industry at a time between 1970 and 1990, when Aswani, a sub-industrial cluster in Isolo, was at the peak of its performance.

But, the industrial life at Abimbola Street and its surroundings has dimmed. Except for the resilience of Johnson Wax Nigeria Limited, an insecticide maker, and dozens of warehouses, Abimbola Street would have been described as a ghost neighbourhood.

With the likes of the comatose Femstar and Company (Limca and Gold Spot bottler) and several other ventures that made the street tick those days, the street has lost its boom.

These areas have suddenly given way to other uses.

The same goes for Abimbola House itself, which used to be a haven for many small-scale manufacturers. A large portion now houses a showroom belonging to the Tecncool Nigeria Limited, a distributor of LG products, and several other marketing companies that are serviced by a branch of Wema Bank Plc, which is situated on the ground floor.

At Matori, Iganmu, Oba Okran, Ijesha and several other industrial estates in Lagos, this is the new order.

For instance, on Kolawale Shonibare, a street on the industrial arm of the estate where the likes of Eleganza Group once commanded a huge influence, new residential buildings and hotels have sprung up.

In the 1990s, Eleganza, a company owned by a doyen of the Nigerian industrial sector, Razaq Okoya, was employing both skilled and unskilled labour from different parts of the country.

Its imposing property on the estate has been turned to other uses. Most of the collapsed companies, like what obtains in several other parts of Lagos, have been transformed to storage facilities for sundry imported goods.

In fact, the average wait time to conclude a lease of a warehouse has continued to increase basically as a result of low demand. Between 2015 and 2016, the average wait time was in the range of 60-90 days, towards the end of 2016, it had doubled to 150-180 days and in 2017, there were still many warehouses that remained in the market for upwards of 300 days or more.

Warehouse rates in Lagos are in the range of N1, 200 – N1, 800 per square metre and increases with proximity to the ports. In Trans Amadi Industrial estate, properties command rent in the range of N1, 500 per square metre per annum while Idu, Abuja attracts about N1, 800 per square metre.

Industry watchers attribute the collapse of the sector to electricity outages, transportation bottlenecks, crime and corruption. Nigerian manufacturing firms suffer acute shortages of infrastructure such as good roads, potable water, and, in particular, power supply.

Contrary to insinuations that urbanisation cut short industrial developments in urban centres, some built environment experts, and especially town planners pointed out that the encroachment by residential developments did not affect the growth of the industrial estates.

Town planners
Reacting, a former President of the Nigerian Institute of Town Planners (NITP), Remi Makinde told The Guardian that what had become the sorry state of most of the industrial estates could be blamed on the poor economic situation in the country.

He observed that since about 20 years ago, the situation has been going down and many of the established industries had to fold up their businesses.

“At Ikeja industrial estate, we used to have Michelin and Dunlop tyres and the Nigerian Textile Mills. Regrettably, most of them have been taken over by churches after they folded up completely whereas the churches can’t employ such a huge number of people accommodated by the manufacturers and industries. These are industries employing thousands of Nigerians and feeding many families. The industrial estate in Apapa still maintains its status but bad roads and accessibility problems have run it down and Apapa is now a slum”, he said.

On solutions to the problem, he said there had to be a conscious government policy and amelioration project to revitalise industrial estates in the country. According to him, there would be a need for a conscious urban renewal scheme to upscale infrastructure in the estates for industrialists to move back to the country.

Makinde said irrespective of a master plan designed for an area and no matter how intelligently built, the economic situation would determine whether it would be successful or otherwise.

“ That is why master plans are being revised from five to ten years in accordance with the economic direction. The economic situation has changed so many things. A conscious policy by the federal, state and local governments will help to rejig the situation,” he said.

Corroborating his views, the Chairman, Lagos branch, Nigeria Institution of Town Planners (NITP), Bisi Adedire, regretted the abuse of the master plans for areas zoned for industrial purposes.

He, however, noted that complementary uses might be allowed in any master plan. According to him, many of the industries have moved out of that environment while some of them are no longer functional.

He stressed that when government wants to do a review of the master plans, some owners of the industries along the area complained that they are no longer interested in using the place for industrial purposes.

While some cleverly changed the use, others sold out for religious activities and they turned them to places of worship. Others cleverly said they wanted residential apartments for their staff, thereby out of the land that is supposed to be for industrial use, they now have residential houses inside the industrial complex.

“We now have a couple of legal changes but the government lacks the instrument for monitoring. Had it been there was adequate monitoring, it could not have reached this level.”

According to him, there is a model city plan for Ikeja, Lagos State embarked on the preparation of a model city plan for areas like Ikoyi, Victoria Island, Apapa, Badagry, Epe, Ikorodu and Agege. Those of Ikorodu and Epe are still being worked out.

“Recently, I saw a filings station close to Vita foam, without approval, a lot of things like that.

“As a branch, we are embarking upon a project called ‘Change the City Project’, we are seeking the support of the government so that we have various groups.

“ Each of these groups will identify some of the challenges in the areas of housing, transportation and waste management so that we come out with a policy.

“We are asking the government to allow private individual consultants by engaging professionals in the monitoring of activities in the state.
“With that, all these haphazard developments will stop in these areas. The government cannot do it alone, that is what we are trying to put across”, he added.

Another town planner, former NITP Lagos branch chairman and past president, Association of Town Planning Consultants of Nigeria (ATOPCON), Moses Ogunleye, explained that there is always proper designation in zoning land uses, as such no land use is expected to encroach on another, except the plan of the area has been reviewed or rezoned.

According to him, property developers are not allowed to build residential apartments in industrial areas. But he admitted that some industrial plots were being leased temporarily for places of worship, event centres and banking services.

MAN speaks
But the Chairman, Ikeja branch, Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, said the reason for the displacement of industrial estates was not basically an encroachment by residential occupants but the fact that occupants vacated the zone to other areas because of the issues they had in terms of meeting up with their production and business demands.

He said pertinent issues, which the association had also been talking about overtime, include the overall poor business climate, the high-interest rate, monetary policy, poor electricity, bad road network and insecurity in the locations.

“The industrialists vacated the places because they were not good for their businesses and so they have to look for better areas and so you have a vacancy for people to buy their warehouses and so convert them to residential buildings. If you look at Dunlop, they left and anybody could occupy where it had been before. In Acme road, Ikeja, many companies there, left also. They either moved out or relocated from the country, ” he said.

“They are displaced because the places are vacant and when they see good money offered to them, they get swallowed up. If you have a factory and you are occupying one-third of it and somebody offers good money to relocate, owners may be tempted to oblige. Now industrial zones have become something else.

“It should really give concerns to the government that a place meant for an industrial estate is being displaced. I believed the government knows why they are being displaced and should map out solutions that will bring them back”, he said.

Meshioye said it’s not enough to have industrial revolution plans and others, but must be seen to work to bring economic prosperity.

He said, “The high exchange rate for dollar to naira in recent times is not good for business. Only those who have a strong backup could manage to survive. Businesses have been impacted adversely and those that could not take the shock moved out of business.”

He declares that the government should formulate policies that would support industrial growth because if the established industrial estates had been functioning well, the nation would have experienced a high employment rate.

“Lagos in general and Ikeja, in particular, are industrial hubs. If things have been working in full capacity, there would have been high statistics for employment, high production of products, low prices of goods, reduction in crime rate, peace, innovation and more investment because investors would be comfortable with the environment, more taxes to government from employees/companies and other positive effects”, he stated.

Going forward, Mr Meshioye charged the government to work hard on the existing industrial policy.

“Government is putting in place low interest, this could be fine if industrialists could access it easily. Access to special funds by manufacturers would be very helpful. More support and the provision of infrastructure like good road network, stable electricity is key. Water is needed for a gradual reversal of the displacement.”

The government must ensure that an industrial estate is used for nothing else but the purpose for which it has been planned and things that would sustain industrial parks must be put in place.

“We may not need to bother about new industrial zones if those in place are maintained. In Lagos, industrialists are moving now to Sango-Ota, Shagamu zone and basically Ogun State. Nestle and Nigerian Breweries have relocated there. For Nigeria, it is a good development but Lagos is losing out. The government needs to provide industrial parks for industrialists and not just Small and Medium Scale Enterprises. We need bigger parks for big companies.”

Lagos State government
But the acting Head, Regional Master Plan, Lagos State Ministry of Physical Planning and Urban Development, Prince Ogunlewe Adebisi, said there were still industrial estates, stressing that residential estates could not come in industrial areas except where they shared boundaries.

He said: “We still retain Oregun, Ikeja and other industrial areas, but there are certain areas within Oregun dedicated for mixed-use. It is a new master plan. We took into consideration the existing development pattern, those sides we felt can be accommodated. In some cases, people bought residential areas and turned them to industrial use because they shared boundaries.

“But now that industrial development is not thriving again they want to revert. At times, it could have been a road that separated residential from industrial and some people because of the cost of land within the industrial area, they bought close to the industrial areas and use it for industrial purpose or lease, where there are warehouses or light industries.

“When activities are not thriving again, they want to revert and change the use. In the case of worship centres, there are other permissive uses within an industrial area. There are areas, where they allowed for a place of worship or institutional use. Personally, I will not like to see where an industrial area will be sold for a place of worship, because it is killing the economy.

“The government has not come up with a policy to forbid people from buying such property and when they want to buy they will not tell you that they want to use it for church and you give them the consent. Except you put the name of the church there that is when you will see the consent. But most institutional uses are permissible in an industrial estate.

“But the sale of an industrial area for church purposes should be discouraged because it is killing our employment opportunities. Because the number of employees a church could grant is lower than industries. We should wait for somebody else who wants to establish an industry to get. Right now, the government has no control over it, the land belongs to them, they got it from the government. There must be certain conditions too because there must be a distance.

“Most worship centres are industrial buildings or warehouses being converted legally because there is still no policy in place to check that. It is now a lucrative thing to build churches in industrial areas than residential areas because of the existence of infrastructures like roads and electricity”, he said.