Nigerian manufacturing sector weakest among MINT countries

MINT is a neologism for economies of Mexico, Indonesia, Nigeria and Turkey. It was originally coined by Fidelity Investments, a Boston-based asset management company, and was recently popularised by Jim O’Neill, the retiring Goldman Sachs chairman, who had earlier evolved the term BRIC – comprising Brazil, Russia, India and China.

O’Neill believes these four economies have quality demographics that will be favourable for at least the next 20 years, while their economic prospects remain interesting. Their economies have large number of young people and sophisticated middle-class as well as high gross domestic product (GDP).

In spite of this classification, BusinessDay’s Real Sector Watch’s research has shown that Nigeria’s manufacturing sector remains weakest among these economies, despite posting $34.7 billion in the recently rebased $510 billion GDP.

Mexico

Mexico’s nominal GDP, using 2013 estimate, is $1.231 trillion. World Bank’s 2011 estimate put the manufacturing sector’s contribution to GDP in the country at 18.24 percent. Capacity utilisation for the sector by January 2014 was 79.3 percent, while export commodities majorly include automobiles, electronics, televisions, computers, mobile phones, LCD displays, cotton, silver, fruits, vegetables, coffee, oil and oil products. By end of 2012, total earnings from exports were $370.9 billion, much of which was realised from non-oil commodities. Mexico ranks 53 out of 187 in the World Bank Doing Business ranking, implying that the country is better off than 134 countries ranked.

Indonesia

Indonesia has the largest economy in Southeast Asia, with a GDP of $894.9 billion (2012 est.). GDP contribution of its manufacturing sector is 24 percent, according to the World Bank 2012 estimate. Capacity utilisation by January was 75.54, while export commodities include cement, food, electrical appliances, plywood, textiles, rubber, oil and gas. Export earnings by end of 2012 were $199.1 billion, while 2014 Ease of Doing Business ranking is 120.

Turkey

The International Monetary Fund (IMF) classifies Turkey as an emerging market economy. Its economic size is $820.827 billion (2013 est.), while contribution of the manufacturing sector to GDP is 18 percent, according to World Bank 2012 estimates.

Capacity utilisation of the sector is 73.1 percent (January 2014) as it is 69 in the 2014 World Bank Doing Business ranking. Export commodities by end of 2013 were apparel, foodstuffs, textiles, metal manufactures, among others, while total earnings from them were $167.60 billion.

Nigeria

Nigeria is the largest economy in Africa and 26 in the world. Its GDP, recently recalculated by the National Bureau of Statistics (NBS), is $510 billion. Nigeria’s manufacturing sector is the third-largest on the continent, and produces a large proportion of goods and services for the West African region. But GDP contribution of the sector is just 6.81 despite debasing, while capacity utilisation hovers between 46 percent and 55 percent, recent data have shown.

Export commodities include petroleum and petroleum products, which the World Bank put at 95 percent (2012 est); cocoa, rubber, processed foods, cement, entertainment, among others. Export earnings by end of 2012 were estimated at $97.46 billion. This means that in spite of much ado about oil, Nigeria still lags behind peers in terms of earnings or revenue. This is worsened when 95 percent of the earnings came from oil, analysts say.

The Nigerian Export Promotion Council’s (NEPC) non-oil exports data for 2013, revealed that total earnings by end of the year were $2.97 billion, while export products further included tobacco products, cotton yarn, woven fabrics, copper, cashew nuts, fish and shrimps, among others.

Conclusion

Though the classification reveals the promising potentials of the Nigerian economy, it is obvious the manufacturing sector, an essential part of the real sector, still lags behind peers. Analysts say the 10 percent GDP target of the Federal Government by 2019 is still infinitesimal, while more efforts should be put in place to revivify wobbling or moribund sub-sectors such as textiles, salt, automobiles, motor and parts, furniture, cosmetics, ceramics, toiletries, solid minerals, which serve as raw materials, among others.

“Our economy is the least diversified among these economies. The fact is that if there is collapse of oil, Nigeria will fall out. We need to increase productivity of our economy,’’ said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), in an interview with BusinessDay.

Kola Jamodu, president, Manufacturers Association of Nigeria (MAN), recently said development in the West African region had made it imperative to industrialise Nigeria, since manufacturing sector had the capacity to create wealth and employment, stressing the need for the government to retain sectoral waivers and ensure that the results of the power sector reforms were felt soon.

ODINAKA ANUDU