Manufacturing in Nigeria needs consistent power supply and policies
Over the years, successive governments in Nigeria have flaunted attractive plans to industrialize the nation. But once the hopes of the citizenry are raised the plans are either not implemented or poorly executed; and the consequence is a return to status-quo ante of rent collection. In fact, numerous well-intentioned policies often end up implemented in such a way that they defy their original purpose.
In the last decade, the impact of globalisation has led to an outsourcing of production by Western manufacturers and the consequent industrialisation of developing countries; however, in Nigeria, the industrial landscape is speckled with uncertainties. The reason for this is not far-fetched.
The nation’s poor infrastructural facilities, coupled with inconsistent policies team up to make the cost of production in the country very high. As such the manufacturing sector’s contribution to GDP has fluctuated between appalling single and low double digits. This probably is the reason that the philosophy of the ‘Nigeria Industrial Revolution Plan’ (NIRP), started with the acknowledgement that Nigeria’s industrialization must be driven by long run competitiveness; that industries thrive locally and compete globally.
Industry needs a competitive business environment to prosper: an environment where costs are low, regulation is streamlined, infrastructure is reliable, and government bureaucracy is minimized. The plan also recognises that with continued globalization of the world’s economy, the convergence of consumer tastes and worldwide dispersal of industrial technology, the manufacturing sector has never been as competitive as it is today. Companies are no longer concerned about firms within their geographic jurisdiction, but with every competitor all over the world.
Low international freight costs and unprecedented levels of information available over the internet have truly transformed the world into a single accessible market. In today’s world, the fierce global competition has reduced the likelihood of spontaneous development of new industry. Furthermore, the document noted that in the modern global economy, industrial development is not luck; it is a nation’s choice.
Of recent the manufacturing sector has continued to show strong positives, having added 1.584 million jobs out of the total employment created in 2013. The non-metallic products sector, comprising cement, glass, ceramics and chalk makers, generated a total of 1.183 million jobs, accounting for 74.6 percent of the total.
The new jobs created in 2013 represent 48 percent increase from the 1.071 million created in 2012. According to Manufactures Association of Nigeria, the increase has been as a result of improved performance in production output and the corresponding increase in the rate of capacity utilisation. New entrants into the manufacturing sector engaged fresh workers, while some firms that had not fully started operations engaged few personnel in the course of putting some skeletal services on ground.
This performance may be linked to the sectoral waiver policy which was strengthened in 2010 by Ngozi Okonjo-Iweala, the Coordinating Minister for the Economy and Minister of Finance. In addition, manufacturers in Nigeria attribute the remarkable increase recorded in capacity utilisation within the last year to favourable government policies, especially with respect to industry, trade and investment.
We believe in the deliberate, precise, and intense approach to nurture and expand industrial activities. This is even more paramount for a country like Nigeria which is starting from a relatively low manufacturing base. Nigeria must start re-industrialising in order to manufacture products with greater value than the raw materials used to produce them if the economy is really to be transformed.
The importance of manufacturing to an economy cannot be over-emphasised; it is obviously critical for real economic growth and development. Hence, what we need do now is further improve the situation through policy consistency; streamlined activities of government regulatory agencies in the states and provision of gas to power the industries.