Manufacturing stunted by poor linkages between large, small industries
Nigeria’s manufacturing sector is hard hit by poor and ineffective linkages between large corporations and small industries.
Most large-scale manufacturers ignore small- and medium-scale players within their value chain, forgetting that the latter often have the capacity to supply certain inputs at subsidized rates.
With effective linkages, small and medium industries can promote the marketing activities of large-scale players while also supporting and implementing their innovations. On the other hand, large corporations can help small- and medium-scale players grow through provision of credit, funding of innovation, and export incentives, among others. This system has worked effectively in countries like Mauritius and China, but has failed in Africa’s largest economy.
In his paper entitled, ‘Linkages between SMEs and Large Industries for Increased Markets and Trade: An African Perspective’, Nureldin Hussain of the African Development Bank says that by working together, firms can gain the benefits of collective efficiency, enabling them to link with larger producers and break into national and global markets.
The Manufacturers Association of Nigeria (MAN) has stepped in to tap into the gains of effective linkages by inaugurating the Large Corporation Group.
At the inauguration in Lagos, Frank Udemba Jacobs, MAN’s president, said one of the most crucial tasks before the Large Corporation Group was the facilitation effective linkage between small/medium-scale industries and large-scale industries in the production and supply value chain. Jacobs said linkage was critical in the task of making Nigeria a manufacturing hub in the sub-region and beyond.
“This group has been charged with the responsibility of creating and sustaining conducive economic and social climate for the operation and development of large-scale industries, creating environment for the operation of manufacturing business in Nigeria, promoting the usage of local raw materials in the manufacturing sector through collaboration with the Raw Materials Research and Developemnt Council,” MAN’s president said.
Aisha Abubakar, minister of state for industry, trade and investment, who was a special guest at the occasion, said that the Federal Government was committed to creating the enabling environment for manufacturing to thrive in the country, adding that MAN was government’s strategic partner in achieving this task.
“The tough conditions that manufacturers face in Nigeria, notably inadequate power, were top priorities for the present administration,” Abubakar said.
The event was sponsored by General Electric (GE), global digital industrial technology company, which made a presentation on GE’s Gas to Power solutions, focusing on the use of LPG as a reliable and available fuel source for power generation.
At the panel session on ‘Powering Manufacturing in Nigeria without Power’, Lazarus Angbazo, president and CEO of GE Nigeria, said power deficit in Nigeria required concerted cooperation of all stakeholders in the power ecosystem.
“There is no foreseeable way of boosting manufacturing in Nigeria without fixing the power sector,” said Angbazo.
Ibrahim Usman, vice president, north-west zone /chairman MAN infrastructure committee, said most industries spent between 35 and 45 percent of their earnings on power.
“Without power, these industries are functionless. In those days we had a lot of industries, but now most of them are shut down owing to lack of power. MAN has decided to revive this issue. The idea is to be able to join hands together with different stakeholders to see if we can provide power to industries all over,” said Usman.
“A situation where industries here produce goods at high costs due to high cost of power, while the same goods are produced in China or other foreign countries at really lesser prices, is not good for us,” he added.
ODINAKA ANUDU&CHINYERE OKEKE