Manufacturing in Q1: Bright spots as upsides overtake downsides

In spite of obvious challenges confronting the manufacturing sector in the country, its performance in the first quarter of 2014 betrayed signs of improvement as upsides appeared to have submerged the downsides within the period.

The quarter, which marks the beginning of the year, reported investments in the sector as Procter and Gamble (P&G) established a $300 million plant at Agbara, Ogun State. P&G, a leading name in the Fast-Moving Consumer Goods (FMCG) market, also signalled making further investments as long as the climate in the country remained favourable.

Within the period under review, Ibikunle Amosun, governor, Ogun State, announced that the state had already attracted 34 manufacturing firms, while emphasising that 19 more were already waiting.

“I welcome the president for the commissioning of the 34th manufacturing company in the state. I wish to stress that this is the 34th company this administration is commissioning. There are 19 others also waiting for commissioning,’’ said Amosun, while commissioning P&G’s plant at Agbara early in March.

The sugar sub-sector recorded a huge boost as four key investors planned to pump $2.6 billion into the sector. While Dangote Group earmarked $2 billion for investment in six states in the country through its recently acquired Savannah Sugar Refinery in Numan, Adamawa State, North-East Nigeria, HoneyGold Group concluded plans to invest $300 million on two sites in Adamawa State. Crystal Sugar Mills plans to pump $30 million at Hadejia, Jigawa State, as Confluence Sugar Company concluded to push $240 million into Kogi State to produce 200,000 tons of sugar at Ibaji.

Within this period, cement grade war, which began in the early part of the year, was resolved by the Standards Organisation of Nigeria (SON). A civil society group had accused some cement manufacturers of producing low grade cement, thereby increasing the rate of building collapses in the country.

Dangcem, the leading producer in the country, came out to dissociate itself from producing the 32.5 cement grade, insisting that it was producing 42.5. The company went further to introduce the 52.5 grade, and subsequently the 3X type. On the other hand, Lafarge WAPCO, United Cement Company (Unicem) and Ashaka Cement stressed that each cement grade had a specific application. Within the period, Council for the Regulation of Engineers in Nigeria (COREN) intervened, stressing that cement was not used directly in construction but was normally mixed with other materials to form mortars, sandscrete, concrete, among others. This also re-echoed the views of experts.

SON stepped in and eventually urged all manufacturers to boldly write the grades of cement on their bags, while stressing the need for sensitisation of all block makers and contractors.

The approach of the Common External Tariff (CET) between 15 Economic Community of West African States (ECOWAS) members as well as the Economic Partnership Agreement (EPA) between West African countries and the European Commission increased consciousness of manufacturers as they all began the process of re-engineering so as to be competitive when the regimes begin.

CET is an agreement that tends to ensure uniform tariff among 15 ECOWAS states, while EPA is an agreement that tends to liberalise trade between West Africa and members of the European Commission.

In spite of all the upsides, there were some downsides. Suspension of the Export Expansion Grant (EEG), which is a programme meant to help manufacturing exporters reduce cost and become competitive, still persisted, amid Federal Government position that it was still under review as the previous regime was not sustainable and inefficient.

“We want to review it and ensure that it is sustainable,’’ said Ngozi Okonjo-Iweala, co-ordinating minister for the economy and minister of finance, while addressing manufacturers in February in Lagos.

According to her, over N200 billion worth of Negotiable Duty Credit Certificate (NDCC), the instrument of used in the EEG scheme, had been honoured by the Federal Government in the past, while about N82 billion was still outstanding.

Power generation problems also persisted as capacity fell lower than 2000megawatts, pushing manufacturers in various parts of the country, especially the South-West region to think up alternative sources such as solar, wind, among others.

ODINAKA ANUDU