The push to rejuvenate the manufacturing sector and leverage it to force Nigeria’s industrialisation and global competitiveness is gathering momentum. And on the driver’s seat of the galvanised effort to reset the sector and, ultimately, make it the economy’s mainstay is the Manufacturers Association of Nigeria (MAN). At the behest of MAN, a three-day event organised in Abuja as part of activities to mark its 50th anniversary brought together experts and technocrats from diverse sectors to examine issues holding the sector down and articulate policy suggestions to change the sector’s narrative. Assistant Editor CHIKODI OKEREOCHA reports
Revamping Nigeria’s struggling manufacturing sector, to make it globally competitive and a critical driver for economic development and growth, has never been this compelling. Doing so, with redoubled urgency, is believed to be Nigeria’s assured route to taking advantage of the opportunities in the African Continental Free Trade Area (AfCFTA) agreement where trading commenced January, this year.
The AfCFTA seeks to create a continental trade bloc of 1.3 billion people across 55 countries, with a combined Gross Domestic Product (GDP) valued at $3.4 trillion. Apart from its capacity to promote growth and development, reduce poverty in the partnering countries, it is also expected to help expand and diversify trade and increase domestic and foreign investments.
Interestingly, Nigeria was tipped by experts as AfCFTA’s biggest potential beneficiary, given her nearly 200 million population and huge market for trade. For instance, Nigeria, which accounts for about 76 per cent of the total trading volume of the Economic Community of West African State (ECOWAS), stands the chance of leveraging the AfCFTA to increase her export trade by 100 per cent to $50 billion in the next 10 years.
But, as heart-warming as this may be, there are fears that the nation’s weak manufacturing base might work against maximising the envisaged benefits from the AfCFTA. The thinking was that the AfCFTA potentially handed Nigeria the opportunity of boosting her competitiveness and remaking her economy severely battered by the COVID-19 pandemic and the oil price crash but her manufacturing sector is at moment not sufficiently galvanised to take advantage of this opportunity.
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Manufacturers are aware of this reality. And, accordingly, they are leaving no stone unturned in their effort to ensure a revamp of the struggling manufacturing sector capable of taking its pride of place as the economy’s mainstay. The recent three-day event to mark the golden jubilee of the Manufacturers Association of Nigeria (MAN) attests to manufacturers’ commitment to turning around the sector’s fortunes.
From a humble beginning on May 7, 1971, MAN has evolved into the authentic voice of manufacturers in Nigeria, representing the interests of over 2,500 manufacturers (small, medium, large and multinational industries) spread across 10 sectors, 76 sub-sectors and 16 industrial zones. The manufacturing sector also employs over five million workers, directly and indirectly, with 8.93 per cent contribution to the nation’s GDP.
Despite the sector’s size, spread and contribution to GDP, manufacturers spent over N67.38 billion on self-generated electricity to keep their businesses running in 2019 alone, according to its President, Mansur Ahmed.
Other myriads of challenges plaguing the sector include poor access to foreign exchange (forex) for importation of raw materials and machines that are unavailable locally, high cost of production forced by increase in cost of electricity, poor infrastructure, the prevailing high lending rate, the intractable gridlock at the nation’s ports, declining sales caused by low government patronage and customers’ decreasing purchasing power; and the persistent fall in the naira exchange rate which feeds into prices of raw-materials and other manufacturing inputs.
Collectively, these challenges are manifesting, much to the chagrin of industry operators, in low industrial capacity utilisation, modest manufacturing activities and constrained export of manufactured products.
For instance, according to the Manufacturers CEOs Confidence Index (MCCI) for second quarter 2021, the sector’s capacity utilisation declined by eight per cent in the second quarter of 2021, as against four per cent decline recorded in the first quarter. Volume of production also declined by eight per cent in Q2 2021 vis-a-vis five per cent decline in Q1 2021.
Advent of MCCI
The MCCI was created by the Manufacturers Association of Nigeria (MAN) as a barometer to garner the perceptions of CEOs of manufacturing companies on changes in the economy. It also gauges changes in key macroeconomic indicators including sector-specific factors that represent government activities and policy measures in the economy.
The Index, which was made available to The Nation, however, said production and distribution costs increased by 21 per cent in the second quarter of 2021 as against 22 per cent increase in the first quarter of the year, thus, indicating one per cent decline over the quarters. Manufacturing investment also declined by 15 per cent in the second quarter of the year as against 17 per cent recorded in the preceding quarter.
It was against this backdrop that MAN used the the three-day event to mark its 50th Anniversary to highlight some of the issues and also suggest the way forward for the beleaguered sector. Accordingly, the International Conference Centre, Abuja, venue of the event was a beehive from October 25 to 27, as series of carefully-curated themes lined up by the association put the manufacturing sector on the spotlight.
For instance, there was a high-level lecture on industrialisation. It was in commemoration of the first-ever president of MAN, Chief Adeola Odutola.
A presentation by the Director-General of the World Trade Organisation (WTO), Dr. Ngozi Okonjo-Iweala, was themed “The trajectory of Nigerian manufacturing sector: Resetting for global competitiveness.”
Adesina speaks
There was also a session to address how manufacturers could overcome challenges plaguing the sector. Its theme was “Overcoming the binding constraints to competitive manufacturing for intra-African trade.” It had the President, African Development Bank (AfDB), Dr. Akinwunmi Adesina, as guest speaker, as well as other key resource persons.
The event, which was streamed live on Facebook and YouTube for general viewing, closed with a private session with major MAN stakeholders and an anniversary dinner and award night to recognise outstanding individuals. Stakeholders in the manufacturing industry and the general public were also invited to join the enriching conversation online.
Beyond the razzmatazz of the three-day golden jubilee event, the occasion was a credible platform for experts from diverse sectors, technocrats and other private sector operators to formulate and articulate policy suggestions, which, if diligently implemented, promise to change the manufacturing sector’s narrative.
Okonjo-Iweala’s presentation
For instance, Okonjo-Iweala, who spoke on the impact of trade in driving industrialisation, did not mince words when she said Africa would be wealthier if its countries traded amongst themselves rather than with other continents. “When African countries trade with each other, the goods they exchange have more value-added than the goods they send to the rest of the world,” she said, adding that trade also plays a pivotal role in uniting countries, driving global economic reforms, and exposing businesses to more markets.
She scored the bull’s eye on the inability of African countries to trade among themselves. Despite efforts by Nigeria and other countries to move the continent to the next phase of economic growth and development via trade, the continent’s share of global trade remains abysmal, with intra-African trade as low as 15 per cent, compared with 19 per cent in Latin America, 51 per cent in Asia, 54 per cent in North America and 70 per cent in Europe. But the coming into force of the AfCFTA is expected to help realise the potential to expand and accelerate the growing diversification and dynamism of intra-African trade, bringing the share of intra-African trade to 22 per cent by 2022. It will also bring total intra-African trade to about $250 billion, from about $160 billion currently.
For Adesina, prioritising value addition to raw materials is key to removing one of the constraints to competitive manufacturing. He said a major contributor to poverty in Africa (Nigeria inclusive) was its heavy dependence on its natural resources.
His words: “Africa’s natural resources are enough to make it one of the wealthiest in the world; but tragically and ironically, her natural resources have not translated into wealth.
“The reason is simple – a dependency on the export of raw materials with little or no value addition. Exporting raw materials only leads to vulnerability, and no nation or region whatsoever, has succeeded by exporting raw materials. We export natural resources and import manufactured products. This approach is a race to the bottom towards poverty, inflation.”
Adesina’s intervention, which focused on Africa’s bottlenecks to industrialisation, also highlighted a few points such as uneven border policies, foreign exchange and perfectionism as necessary to be addressed.
“Industrialisation is the way out for Africa. The continent lacks industrial manufacturing, which is visible through the fact that African countries impose low tariffs when exporting raw materials but face stiff costs when importing value-added products,” he said.
The AfDB boss was, however, emphasised that this could not continue to be the case, hinging his position: “Oil will finish, the industry will remain.” According to him, what this means is that Africa must bridge the gap between being an underdeveloped society and a developed economy. It must become sustainable by investing in the manufacture of indigenous products that add more value to its GDP.
He advised industrialists to de-emphasise export of raw materials and intensify local production. He also recommended the establishment of industrial digital skills academies and link them to universities and technology innovation hubs across the world.
Adesina, however, lamented that poor electricity supply was hurting the growth of Nigerian industries, noting that no business can survive in Nigeria without generators. “Today, no business can survive in Nigeria without generators. Consequently, the abnormal has become normal,” he said, pointing out that unless Nigeria decisively tackled its energy deficiency and reliability, its industries would always remain uncompetitive.
MAN gets GAC’s kudos
The Chairman of Guangzhou Automobile Company (GAC) Motors, Chief Diana Chen, congratulated MAN on its giant strides to drive industrialisation in Nigeria. She also restated GAC’s commitment to supporting MAN in driving productivity in the country and the continent.
“We are happy to do this partnership because we know how important manufacturing is in the country,” she said.
Chen also spoke about the GAC’s vision vis-a-vis its activities thus far in driving industrialisation in Africa, primarily through the Nigeria-China bilateral agreement.
Her words: “The partnership in Nigeria is not only a matter of business relationship, it is also for China’s commitment to driving regional developmental growth,” she stated.
Buhari praises MAN
President Muhammadu Buhari also praised the steps MAN had taken in driving Nigeria’s industrialisation. Buhari, who was represented by Secretary to the Government of the Federation (SGF), Boss Mustapha, restated the government’s commitment to supporting MAN. “This administration remains committed to partnering with you towards driving industrialisation efforts,” he said.
A major highlight of the events was the 49th MAN’s Annual General Meeting (AGM), where its Ahmed was re-elected for the second term. Ahmed said the association would continue to support manufacturers and the government to grow the economy.
He, however, stated that with an enabling environment, the percentage of contribution of the manufacturing sector would grow exponentially, adding that Nigeria is key to Africa’s industrialization.
