Manufacturing woes persist as growth slumps in textile, steel, chemicals industries

The growth rate in the textile, steel, wood and chemicals/pharmaceuticals industries have slumped on the back of harsh business environment facing local manufacturers.

A research report conducted by Martin Ike-Muonso, a professor, on ‘Discriminatory Margins of Preferences for Selected Manufacturers Association of Nigeria (MAN) Sectors’ shows that the growth rate in the textile, apparel and footwear sub-sector crashed from 34 percent in 2013 to -1 percent in 2016.

Similarly, the growth rate in the basic metal, iron and steel sub-sector fell from 13 percent in 2013 to one percent last year, just as that of the wood and wood products industry dropped from nine percent to -4 percent in 2016.

Also, the chemicals and pharmaceutical sub-sector was not spared, as growth rate in the industry slumped from 50 percent to one percent.

“All these point to the urgency with which the government is expected to be firm in the design and implementation of pro-manufacturing policies, otherwise, we shall remain perpetually a consuming country,” the report, which was submitted to the Enabling Nigerian Advocacy for a Better Business Environment (ENABLE) II, says.

The report, which was distributed at a stakeholders’ forum on ‘Buy Made-In-Nigeria’ Advocacy Campaign in Lagos last Thursday, enumerates some of the issues bedevilling the growth of the sub-sectors as climate change/deforestation, lack of raw materials, high diesel cost, drug counterfeiting, electricity infrastructure and high taxes/duties.

Others highlighted include high inflation rate, insecurity, skyrocketing interest rate, long tenor of imports due to foreign exchange challenges, poor road network, lack of modern equipment and smuggling.

“Out of these performance drivers, two stand out as most critical. These are smuggling and foreign exchange challenges. It is inconceivable how a textile sector that is so viciously exposed to smuggling hawks can survive and grow unless there are deliberately put-in-place measures to protect the industry,” the report says.

The report recognises foreign exchange challenge as the second most important factor, as inability to access dollars needed to import inputs or otherwise naturally has a significant impact on the manufacturing sector.

“The prosperity of the wood and wood processing industries is seemingly shaped by climate change/deforestation, high taxes, inflation, availability of needed machineries and technology as well as other applicable infrastructure. Not replacing felled trees with new ones has gradually led to the problem of deforestation, which in turn depresses the capacity utilisation in the wood processing industries,” the report elucidates.

It further states that drug counterfeiting and the proliferation of unapproved drugs, which are affecting the credibility of the healthcare system, are also undoing the prosperity of the chemicals and pharmaceutical industry.

“Aside the harm to the health of the citizens, the act of counterfeiting is similar in every respect to smuggling. It also hampers the growth of this industry. Nevertheless, beyond counterfeiting, the sector’s number one challenge appears to be the difficulty in accessing finance for its growth and expansion,” it states.

On the iron, steel and metals sub-sector, the report says that the depleting reserves of iron ore and steel is one of the biggest challenges bedevilling the prosperity of the industry, adding that inadequate provision of infrastructure leads to drudgery and low productivity, which lowers output and associated profitability.

ODINAKA ANUDU