Stimulating growth in local industries through government patronage

According to analysts, dominance by foreign firms coupled with harsh business environment which creates additional burden on cost of production constitute critical issues that impede local industries’ growth, more so when foreign firms enjoy government patronage at the expense of the locals.

Most industry operators are quick to explain that at the centre of the reasons for their slow growth and abysmal contribution to the economy is lack of patronage and incentives from the government.

The revolution in the mobile telecom sector has really created jobs for a good number of industries that manufacture facilities used to promote and sustain that revolution , but the story is still the same here as in construction industry where foreign firms dominate the scene and enjoy government patronage.

Local industries that manufacture these products have cried foul, insisting that government should patronise them particularly for the reason that they create jobs for Nigerians and reinvest their profit in Nigeria, all in their bid to contribute to the growth of the nation’s economy.

One of such companies which is engaged in the production of telecomm and electricity towers, a wholly indigenous company, insists that if it gets government patronage in terms of products purchase, it can increase its workforce thereby reducing the number of the unemployed in the labour market.

Wale Akinbiyi, spokesman for the company, confirmed to BusinessDay that this company has 100 percent local content in its operations, explaining that all its activities and production processes are managed by Nigerians.

“The company currently serves major players in both telecom and power sectors within and outside the country, but needs government patronage”, Akinbiyi said.

He recalled that, before now, companies in Nigeria that needed these services travelled abroad to import them because there were no local manufacturers, adding that even the federal government of Nigeria did import from Srilanka, Indonesia, China, Turkey etc.

However, this sector currently boasts of a few well equipped manufacturers with modern and computerized equipment to meet government’s requirement. Akinbiyi noted that private companies now purchase from these local manufacturers, but the federal government does not because it prefers to import these products from countries like Srilanka, Turkey, China, Indonesia etc, saying that this is not helping the local manufacturers.

“It is curious that even foreign companies based in Nigeria which are owned by Turkish, Chinese, Indians etc do patronise these local manufacturers but the federal government prefers to seek the services of foreigners who will go back to their country to get the materials duty-free while for the local manufacturers, raw materials import attracts between 20-25 percent import duty which is killing businesses and not encouraging local content”, he said.

“Continuing, Akinbiyi said,” the authorities of these companies are asking for government’s patronage because it consumes a lot of these telecomm/electricity towers by reason of the rapid developmental processes in the country. The local manufacturers should also benefit from these huge demand which, on the average, is about 900,000 tonnes per annum”.

He said that the local manufacturers have an average capacity to produce 150,000-200,000 tonnes, adding that they want the government to patronize them by purchasing, if not all, at least, between 100,000-200,000 tonnes which is okay by them.

The argument of these manufacturers is that government’s patronage will stimulate growth in their business and in the long run contribute to economic growth and development. They want the government to understand that they are directly re-investing the funds gathered from their business into the country since the money is made in Nigeria and by Nigerians.

“In countries like China, Srilanka, India etc, manufacturers pay about 50-70 dollars as salary. There is no corporate social responsibilities unlike here where companies pay good salaries and still engage in community services. Government should patronize these local manufacturers for the benefit of all. They employ Nigerians and can always increase the number to about 3,000 if the companies expand”, Akinbiyi