Follow Us on Google
By Merit Ibe
Nigeria’s business environment, currently hurting manufacturers has further reduced its value addition in the processing and manufacturing industries to less than 20 percent.
This was even as experts in the real sector who spoke to Daily Sun at the weekend identified poor funding, poor research, low infrastructure, insecurity among others as the key constraints mitigating value addition in the sector. In their opinion, value addition to primary products will generate more foreign exchange and contribute to the country’s GDP growth but so far the reverse seemed to be the case in the country.
Nigeria has abundant raw materials but these are mostly exported as raw commodities or semi products.
In the process, the country loses billions of naira and thousands of jobs to countries which do the real value addition.
They explained that raw materials have potential to generate adequate foreign exchange earnings for the economy and strengthen the naira against major currencies, particularly when the products are processed.
The nation’s vast raw materials in the non-oil sector can be leveraged to increase our exports and improve our trade balance.
Mansur Ahmed, president of the Manufacturers Association of Nigeria (MAN), said recently in Lagos that value addition was key to success in manufacturing, as it involves transforming raw materials into finished goods.
Also speaking Chairman, MAN Apapa branch, Frank Onyebu, urged government to create policies and the enabling environment for value to be added to products before exporting.
He argued that the manufacturing industry is supposed to be the engine of the economy, but has so far failed to process because government has shown little concern.
Government is paying lip service to the issue of operating environment, lamenting that many potential investors abroad are interested in investing in this country but for the harsh environment. “The country would have moved forward not just in value addition but in high technology but we are just sliding back.
“It is a pity that we still export primary products without value addition. We all know that the value of any product appreciates with each value addition.”
He however, noted that manufacturers were constrained by a number of factors such as finance, lack of machinery, inadequacy of trained personnel, poor quality control, infrastructure deficiencies, insecurity and poor operating environment.
For value addition to make the required impact, Onyebu said small and medium scale manufacturers would have to be involved.
“Funds and FX, which are not readily available, are needed to procure the required machinery.
Government needs to create technical institutions and make the existing ones functional. Millions of jobs could be created with the right policies.
“Our research institutions are not funded. If we had enough local research, we would have the ability to process our primary products and also adapt to local machinery. This would lead to a conservation of our lean FX.”
He called for special funds for processing of primary products, saying these funds would be co-managed by the government and the private sector to reduce corruption.
For Chairman, SMEs Group of the Lagos Chamber of Commerce and Industry (LCCI), Daniel Dickson-Okezie, in 2018, the Global Economy Business and Economic Data for Manufacturing value added, ranked Nigeria 40th out of 153 countries, which is about 38.2percent.
He said it was below the average rank of 50percent, showing that more efforts need to be made in the area of value addition.
Though he noted there has been some kind of improvements in value addition to primary products over the years, the country was still lagging behind in terms of export earnings.
“We are still behind the line, for instance, from cassava flakes we can still get other products like starch, glucose, which can be exported for more income but we are hardly doing that.”
He emphasised the need to leverage on value addition to improve all sectors and improve our export earnings.
“Nigeria imports about $500million worth of leather products every year, including #80 million pairs of shoes. “That goes to say we are still behind the line in the area of value addition in the leather industry.”
He said Nigeria could develop a thriving leather industry in a place like Aba in Abia state, a large market where leather products are produced in large quantity, “but we are yet to leverage on the performance to improve on the export of finished products.”
He highlighted the challenges to improving value addition to include power supply, poor funding, lack of research, corruption, non implement of the guidelines to establish the export processing zones, insecurity , poor transportation system, among others.
Managing Director, Aarti Steel Ltd, Omokhai Ehimigbai, lamented the lack of funds. He said machines are not available due to lack of capital.
“You need capital to procure processing machines.
“Even when the capital is there ,the gestation period is very short and interest rate is high.
“Commercial banks are not helping matters, as their interest rates come in double digits.
“The same goes with CBN intervention funds. How many manufacturers have been able to access the funds.
“Poor research by our universities is not the right way at all; Policies are overlapping. Govt makes policy without involving operators, how can it work.
“There should be localisation of industries to reduce cost .
“Corruption is another big issue stopping value addition.”
