The Nigerian industrial sector is bedevilled by high operating overheads, poor infrastructure, tight credit conditions and absence of a well-articulated industrial blueprint. Nigeria needs to embark upon some major strategic reform programmes with infrastructure and technological development top on the list of sectors that need urgent attention.
This was the consensus opinion of speakers at the just-concluded 2016 LEADERSHIP Summit on Industrialisation in the states with the theme: “Industrialisation in States: Developing, Harnessing and Sustaining Industrialisation Drive of the State Governments in Nigeria Towards Ensuring Rapid Economic Development.”
But as the president of the Manufacturers Association of Nigeria (MAN), Dr Udemba Jacobs pointed out, a production-based economy would demand the country looking at specific areas of comparative advantage globally and stimulate such areas effectively in order to create wealth and value for the economy.
Participants at the summit agreed that there could not have been a better time than now for such discourse considering present global realities bothering the economy. In particular, the continuous fall in oil prices which made it imperative for Nigeria as a nation to start thinking out of the box and in particular consider issues about post-oil economy.
“The time to have convened this conference was 10 years ago; and, indeed, LEADERSHIP Newspapers did hold a similar conference about 10 years ago. There were also other similar summits during which governors were forewarned that a day like this was not far ahead. Today, oil has virtually lost its value.
“The United States, which used to be the world’s biggest buyer of crude oil, is now the biggest oil producer, surpassing Russia and Saudi Arabia. A few years ago when the United States depended on us for 9 per cent of her oil needs, we were producing 2 million barrels a day. Today, the United States itself produces 14 million barrels per day. So those who daydream that the day of $100 per barrel would return someday lie to themselves,” Mr Sam Nda-Isaiah, publisher and Chairman of LEADERSHIP Newspapers said in his welcome address at the summit.
“State governors will soon find out that industrialisation of their states is the only way out. The days of waiting on Abuja are gone because Abuja itself has money problems of its own.
“Whether the states like it or not, they have to look for ways to generate revenue internally to meet up with the challenges of governance and citizens’ welfare because today, oil has virtually lost its value,” he added.
He also contended that anyone who imports toothpicks and chicken now is on his own, even without any ban. Traders who bring in Thailand rice at current exchange rate will probably not be able to sell in Nigeria’s current rice mass market. That is why the few rice millers in the country can no longer meet the current demand. And this demand will continue to rise. I don’t know why so many businessmen have not gone into the business of food processing in Nigeria. The opportunities are now limitless.”
He therefore called for diversification with special focus on agriculture and solid minerals, stating, “We must add value to our primary agricultural produce, solid minerals and crude oil to get full value.
“State governments should start encouraging private investments in the solid minerals in their states and even take up shares in such private companies instead of complaining that solid minerals remain in the exclusive legislative list. Ditto for agricultural produce. There does not appear to be any other way out for the states at the moment. The era of free money is gone forever,” he said.
NIRP will move to implementation stage
In his submission, Vice President, Prof Yemi Osinbajo,who declared the summit open said the Nigerian Industrial Revolution Plan (NIRP) would now move from planning to the implementation stage.
Represented by the Minister of Industry, Trade and Investment, Dr Okechukwu Enelamah, the Vice President assured that in the weeks and months ahead, the federal government would be unveiling a number of important initiatives aimed at addressing Nigeria’s consistently poor performance on various Global Competitiveness and Ease of Doing Business Indices.
According to him, these concrete initiatives would focus on dismantling the many obstacles that had stood in the way of business and business innovation in Nigeria.
He said the fulcrum of the enabling environment envisaged would be one in which it is progressively easier to do business, policies are predictable and consistent, the government acts as a partner to business and investment, not a competitor or adverse regulator, and in which there is macro-economic stability.
He restated the federal government’s determination to see the country break free from its over-dependence on oil and gas into massive industrialisation bolstered by research, development and innovation of indigenous manufacturing as well as creating environment for investment.
According to him, there was no turning back in the determination of the present administration to tackle corruption, sanitise the system, restore investors’ confidence and build institutions for sustainable growth and development of the country.
Industrialisation requires partnership between private and public sectors
Edo State Governor Adams Oshiomhole, in his presentation stated that Nigeria’s journey towards industrialisation would require an enabling environment and partnership between the public and private sectors.
He pointed out that the President Muhammadu Buhari-led administration has started the journey for the nation’s economic recovery on the right path with the fight against corruption.
According to him, Nigeria has reached a stage where she has realised that the cost of corruption was too high for everybody, that even those that benefitted on net aggregate fall victim of corruption, cautioning that people close to government should consider the days of easy access to public funds gone.
“Now, with the method adopted by our President to fight corruption, the National Security Adviser to the President will not allow anything to happen to money meant for security, let alone to share it to politicians who have no business with it,” Oshiomhole said.
He identified policy inconsistency as a major obstacle to the country’s quest for industrialisation citing examples of granting of waivers by the previous administration, exchange rate policy and the activities of men of the Department of Customs and Excise.
Backward integration of raw material resources
In his remarks, the President of the Manufacturers Association of Nigeria (MAN), Dr Frank Jacobs, observed that the nation’s past efforts towards industrialization were not deep-rooted enough to elicit desired industrial breakthrough.
Jacobs said urgent practical action as well as schematic and purposeful steps to ensure continual harnessing and development of the nation’s abundant resources for sustainable industrial and economic transformation remain the only way out.
According to him, while it is also true that global industrial growth depends on effective processing and conversion of agricultural and mineral raw materials into industrial inputs using appropriate technologies, he argued that if these raw materials were optimally harnessed and directed for processing and use by industries, they would no doubt contribute immensely to the actualisation of Nigeria’s industrialisation dreams.
He canvassed for the promotion of the backward integration of raw material resources through the use of local material resources, and urged the government to provide an enabling environment to encourage the private sector and foreigners to invest in the raw material resources development, adding Nigeria remains the haven for investors in view of its huge population, market and trajectory for growth.
“The success story of the cement sub-sector is an important reference point to the transformation that backward integration provides. The effect of the policy on the subsector was almost magical and overwhelming such that cement production increased from a mere 2,000 metric tons in the year to between 28 to 32 million metric tons today, following the implementation of the backward integration policy in the sector, making Nigeria a net exporter of cement. The sugar sub-sector is another sector that is undergoing significant transformation as a result of the implementation of the backward integration policy,” he stated.
He further submitted that the two major problems associated with importation particularly, importation for industrial production was that first, it drains the foreign exchange of the importing nation and secondly, it makes importing nations vulnerable to shocks and vagaries of the economies of the exporting nations, adding that these two problems have contributed significantly to the backwardness and underdevelopment of the poor nations of the world.
He noted that Nigeria has abundant agricultural and natural resources that could adequately serve and promote industrial production, that were either not discovered nor developed for use and therefore stressed the need for research.
According to him, the dream of Nigeria being an exporter of manufactured goods would remain a mirage since the country had thrown away agriculture and blindly embraced oil export.
According to him, the cost of manufacturing in the country was high because manufacturers have to provide at high cost, basic inputs like energy, roads and other basic utilities, adding that decaying road networks and the absence of efficient rail system contribute to high cost of production.
He pointed out that prior to the country’s financial meltdown, the manufacturing sector had not fared any better largely due to lack of infrastructure and high production cost.
He further noted that the decision of some companies that had bases in Nigeria to relocate to Ghana was another confirmation that the nation’s industrial sector was still held in hostage, adding that it was only companies that had thrown ethics to the dogs that survived “the harsh business environment”.
He also stated that power has become an albatross to the nation’s manufacturing sector.
“On power which is critical to the entire economy, the privatisation is commendable. However, current challenges which led to a fall in power supply should be urgently addressed. Efforts should be made to ensure that the process is better coordinated with the parties – Generation (GencoS), Transmission (TCN), and Distribution (DISCOs) – working with the sole purpose of giving electricity to Nigerians at a minimum of 35,000 megawatts by 2020,” he said.
He further advised that to improve electricity, the micro grid or community grid system as well as embedded generation should be explored.
“Similarly, other constraints such as gas-power, pipeline insecurity and non-implementation of the Gas Master Plan should be addressed.”
Creation of industrial parks
The Bank of Industry said for rapid industrialisation of the states, each of the 109 senatorial districts must be made to host an industrial park.
Its acting Managing Director, Mr Waheed Olagunju said conscious efforts should be made to create one industrial park per senatorial district.
“It has been found that each of the 774 local governments has the requisite reserve of natural resources to be economically independent,” he said.
Olagunju contends that in a commissioned project by the Raw Material Development Agency in partnership with the British Department of Foreign and International Development, adding that it was found out that there were 44 mineral resources that could be developed to become net producers of foreign exchange and work for the unemployed in the society.
In his paper entitled: “Developing Appropriate Financial Framework for Rapid Industrialisation of the States: The Industrial and Development Bank Perspective,” Olagunju added that the identified natural resources in all local government areas in Nigeria means that it is possible to promote viable industrial activities in each of the local government of the Nigerian states and FCT.
He noted that such development cannot happen without the promoters of industries whom he identified as government, private sector and the international development partner as well as community-based developers.
Viable enterprises and not Finance, he said, is the major problem affecting industrialisation and hence, states have a function to ensure that individual entrepreneurs are promoted and allowed to operate in a viable environment.
“The states have a lot to do in terms of enabling environment, luckily, the governors make up the National Economic Council (NEC) and at that level, they can make input for stability in policies because where there is stability and infrastructure is made available, then we can talk about industrialisation,” he said adding that Nigeria is not immune to developmental funding as it has existed right from the time of colonial rule in the various regions and have continued even through the military regime; hence “Money will always run after good investment and in the context of Nigeria, we need suitable long term financing. Financiers will always identify with people with track record of good investment.
“The logical arrangement should be to build a capacity, make money available but don’t throw them to the streets, let them move into industrial areas, this will reduce their start-up prices and expenses.”
He said the Bank of Industry (BoI) was poised to support and assist state governments’ industrialisation efforts through the provision of loans in partnership with the state at very low single digit interest rates, saying the bank for more than ten years has been trying to engage all the states in Nigeria and so far some states have responded.
Citing examples of Anambra (Innoson),Taraba and Kaduna States, Olagunju said the bank also provides funds for entrepreneurs at state level once they meet their criteria or if the state government was willing to guarantee them and has had successes in this regard. “Taraba guaranteed 50 per cent of the exposure to their people and we were able to lend up to 75 per cent of the pool of resources based on guarantee from their state governments and 50 per cent of BOI exposure in their various industries and we want to replicate this frame work to all the state governors,” he said.
He also advised states to partner with foreign development partners because a lot of them are willing to support the present administration. “Government can also partner with international development partners and we have seen it happen in Kumasi where the women process soap using a facility where the Japan Corporation Jaika is supporting women to export sheer soap to japan. They even stamp some Japanese alphabets to it and export it to Japan.
Funding of research
On his part, Executive Vice Chairman of the National Agency for Science and Engineering Infrastructure (NASENI) Mohammed Sani Haruna, stressed that adequate funding of research work would facilitate Nigeria’s efforts to achieve rapid technological development.
“Technologies developed in the areas of spares, components and systems engineering will be increased and easily transferred to entrepreneurs for the production of goods and services,” he said.
“No nation, from the beginning of time, has ever become great without embracing science and technology.
“Science and Technology is an instrument which Nigeria can practically utilise to achieve the goals Vision 20: 2020,” he said.
He pledged that NASENI would intensify its efforts to conduct developmental work in manufacturing, while streamlining applications of technologies developed within or outside its centres, including the patents obtained.
Knowledge institutions must work for Nigeria
In his own contribution, Director-General, National Office of Technology Acquisition and Promotion (NOTAP), said industries that are the end-111users of research results must take interest in the generation of knowledge from tertiary institutions and on the proper application of research results.
He observed that there was a wide gap between the academia and the industries, stating that Nigeria must emerge as knowledge and learning society built on values.
“What we are not doing is that we are not challenging our institutions very well to ensure that they work on problems that are peculiar to our country.
“These three aspects must be done in this framework of change so that we can tackle our food problems, our water problems, infrastructure problems, and many others,’’ he said.
Noting that the Nigerian economy is paying for using foreign technology, he said this has to reduce as Nigerians must be part of that equation.
“We want to showcase Nigeria’s technologies; we want to drive Nigeria’s technologies into our communities, into our industries, so that jobs are created, wealth is created and Nigeria will be a prosperous nation by using its own technology,” he added.
He said that NOTAP was already working to ensure that Nigerians have the capacity and capability to modernise its economy using its home-grown technologies.
Stakeholders and key speakers at the summit were unanimous in their verdict that the present administration has started well by blocking economic leakages and wastages, but advised that President Muhammadu Buhari, must see that as a foundation to propel the country into a functional and institutionalised state, which would stimulate growth in the crucial, but long neglected non-oil sector.
They tasked the government to urgently partner with states and development institutions like Bank of Industry, Agriculture and the Central Bank to disburse funds into the manufacturing and agricultural sectors, stating that the effort would stimulate industrialisation and also create employment.
-Leadership