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By Merit Ibe, [email protected]
In line with the African Continental Free Trade Agreement (AfCFTA) gearing to kick off, the Manufacturers Association of Nigeria (MAN) has intensified its advocacy for a conducive business environment and enlarged scope of engagements with the Federal Government and other stakeholders to fast track implemention of policies and reforms to deepen domestic production and boost the manufacturing sector’s competitiveness.
The association has cried out over the low contribution of the sector to the Gross Domestic Product (GDP), fearing that the promising growth trajectory and development opportunities embedded in the African Continental Free Trade Agreement (AfCFTA) may slip through Nigeria’s fingers.
Recently, the association in collaboration with industry experts, proffered a number of measures to boost the sector’s competitiveness, which will in turn trigger employment rate, investments and improve the economy at large.
Manufacturing is regarded as the economy’s growth engine, with industrialisation seen as central to developing economies. Therefore, the AfCFTA, which came into effect on January 1, 2021, presents a unique chance for Nigeria, as Africa’s largest economy, to bolster its manufacturing sector and become a manufacturing hub for Africa.
In his remarks MAN President, Francis Meshioye lamented that despite being a key industrialisation driver, the manufacturing sector’s contribution to Nigeria’s total output is about 10 per cent, with an average growth rate of approximately 2.3 per cent over the last five quarters of the year.
Meshioye noted that the United Nations Industrial Development Organisation’s (UNIDO’s) industrial competitive performance index has equally shown that Nigeria’s industrial sector has a low competitive capacity.
The MAN President pointed out that there is no better time than now to confront the challenge of low competitiveness and abysmal performance of this important sector.
“It has become a matter of necessity and urgency to deepen our awareness of the imperative of the AfCFTA. We need to develop the right strategies and concerted effort to position our economy as the number one manufacturing hub of the African economy.”
Meshioye said the AfCFTA window should be maximised in such a way that products manufactured in Nigeria would be preferred in terms of quality and pricing.
He lamented that currently, the cost of manufacturing was skyrocketing due to the scarce and unavailable manufacturing inputs that continue to shrink profitability and threaten the existence of the critical sector of the economy.
A former Minister of Industry, Trade and Investment, Mr Olusegun Aganga, also reiterated that the burden placed on manufacturers by poor infrastructure has been one of the major factors responsible for their lack of competitive edge.
Aganga said Nigeria requires about $1.5 trillion over the next 10 years to close its current infrastructure deficit.
He noted that Nigeria must review the legal framework for alternative financing sources such as private equity and venture capital funds and development funds for infrastructure development.
He was emphatic that Nigeria’s Development Financial Institutions (DFIs), such as the Development Bank of Nigeria (DBN), Bank of Industry (BoI), Bank of Agriculture (BoA) and Nigeria Export-Import Bank (NEXIM) are unable to meet the needs of Nigerians because they are grossly undercapitalised.
He noted that Nigeria commenced the repositioning of BoI in 2013 which included getting it credit-rated so that it can access cheap funds from the international capital markets and institutions.
He also said the Central Bank of Nigeria (CBN) has to develop a financing model, working with local banks to unlock new sources of cheap long-term capital for strategic industries.
“It is important to bear in mind that almost all the competitors of Nigeria provide financial incentives and support to manufacturers, especially in strategic industries,” he said.
He recalled that the DBN was set up in 2014 as a wholesale bank to source cheap finance from external sources for DFIs, such as BoI. But, as he stated, “I am not sure it is working that way now and I would encourage the government to review the performance of the bank and reposition it.”
Aganga decried that enough attention has not been given to the MSMEs sector, particularly since 2017.
According to him, the world over, MSMEs are the primary drivers of employment and economic growth, employing 75 per cent and 70 per cent of the workforce in China and Brazil, respectively.
The expert said Nigeria already has a comprehensive plan, the National Enterprise Development Programme (NEDEP), which was launched in 2014 along with the Nigeria Industrial Revolution Plan (NIRP). “This can be updated and implemented as part of the long-term plan,” he said.
“It covers the entire ecosystem of the MSME sector nationwide, working closely with the SMEDAN, Industrial Training Fund (ITF), BoI, the state and local governments and the private sector, under the supervision of the National MSME Council, which was set up in 2014 in accordance with SMEDAN’s Act.”
The Minister of Industry, Trade and Investment, Dr. Doris Uzoka-Anite, while emphasising the pivotal role of manufacturing in enhancing Nigeria’s economic competitiveness, stressed the need to deploy strategic interventions in the manufacturing sector to enhance the country’s competitive edge and harness the full benefits of AfCFTA.
She identified four imperatives to maximise the opportunities presented by the AfCFTA. They include the combined responsibility of the government and manufacturing sector; robust public-private partnership particularly in the area of research and development to enhance the strength of manufacturing.
Others are supporting Micro, Small and Medium Enterprises (MSMEs) with capacity and potential for exports, and investment in infrastructure and technology.
The minister maintained that the government was willing to support the establishment of research and development centres across the country to enhance innovation. She encouraged manufacturers to create these centres and also promote regional value chains and industrial clusters.
