Hard times hit manufacturers in Kano

Manufacturing activities in the northern state of Kano, which before now used to be one of Nigeria`s manufacturing hubs has continued to experience downward movement in the recent times.

The glaring cumulative effect of this development on the state is the rising incidences of joblessness, particularly among the teeming able-body young people in the state, and its attendant growing cases of hopelessness, which experts have identified as a factor fueling the insecurity being experienced in the state, and other states in the region.

Kano state which is commonly regarded as one of the most influential sub-national entities in the country has for centuries been playing pivotal role in the socio-economic and political development of northern Nigeria.

According to facts gathered by BDSUNDAY various factors were responsible for the present diminishing status of the state in the area of manufacturing activities, as well as general economic outlook.

A total of 232 manufacturing companies have closed shop in the commercial city of Kano between 1994 to date, a report compiled by Manufacturers Association of Nigeria (MAN), has revealed.

The affected companies are among a total of over 338 existing in Sharada/Challawa and Bompai Industrial Estate, the two estates where the bulk of manufacturing activity is concentrated in the city, before now.

A breakdown of the affected manufacturing companies shows that of 106 out the 155 industries closed down in Sharada/Challawa, while, a total of 126 out of 183 industries folded up in Bompai, within the period.

The report shows that most of the affected industries are those in Textile, Food and Beverages, Motor Vehicle Assembly, Chemical/Pharmaceutical, Pulp Paper/Paper Product, sectors.

Confirming the on-going decline in manufacturing activities to BDSUNDAY, recently Suleiman Umar Tofa, chairman, Bompai branch of the Manufacturers Association of Nigeria, said that the factors responsible for the trend include lack of basic infrastructures, such as: power, water, collapse of railway, and the poor state of the roads linking the industrial estates in the state.

Other reasons are multiple taxations, the long distance between the state and the seaports in the country, which, he stated put the state at a disadvantage in the area of manufacturing activities.

In the same vein, Tofa added that the recent policy of the Central Bank of Nigeria, to exclude some good and services from the list of items valid for Forex, has forced many companies producing wheat flour in the state to shut down.

One of the companies that have closed down their operations in recent times was the Northern Nigeria Flour Mills Plc, which shut down its wheat processing plant in the city.

The move to shut down the plant was as a result of growing difficulties the company now faces in importing wheat, the core ingredients used for its operation because of the new CBN `s policy.

The company like many other ones producing wheat flour in the country depends on imported wheat from the United States of America, and some European countries, for their operations.

Subsequently, the company, which is the biggest, as well as the oldest flour manufacturing concern in Northern Nigeria has off-loaded over 100 workers operating the plant into the already over-saturated Nigerian labour market.

According to Tofa, as it is today no company in the northern part of the country produces wheat flour, the flour being consumed in the region are now coming from companies still managing to remain in operation in Lagos-Ota manufacturing  axis of the country.

However, he was optimistic that the commitment of the President Muhammadu Buhari-led administration in the country, as demonstrated in his budgetary proposal for the sector was an indication that he is out to address some of the critical challenges confronting the sector in the state.

“The present administration`s budgetary commitment to the manufacturing sector is a good thing, it will address the critical challenges making it very difficult for state to attract new industrialists, as well as sustain the existing ones.

“If government does implement the budget as projected, I think this will be the first step towards addressing some of these challenges confronting manufacturing, and we hope the subsequent budget would focus more on capital expenditure,” he disclosed.

Tofa also suggested that special incentives should be put in place, such as reduction of income tax, as well as tax holidays as a way of encouraging more entrepreneurs in the state to venture into manufacturing activities.

“As we know Kano is disadvantaged in the area of the distance between the seaports and the state, and considering that manufacturing in Nigeria is import-dependent, one way or the other be it through raw-material or spare parts, in addition  machinery

“My suggestion is that government should consider some kind of tax incentive to assist manufacturers here, for example, if you are collecting 40percent income tax let say in places like Lagos, in Kano you can reduce it to about 30percent, and the 10percent difference will be to encourage manufacturers in the state to cover the disadvantage.”

Tofa called on the Federal Government to fast-track the completion of the gas pipelines project.

Also, he wants government to promote the establishment of a Cluster Power Generation Plant that will leverage on gas which it could fund solely or in partnership with private energy development players in the region.