Poor innovation in industries slows down Nigeria’s productive capacity

Low level of innovation in Nigerian manufacturing industries is slowing down the productive capacity of Africa’s largest economy, findings have shown.

General productivity of an economy is determined by the labour-output ratio. Labour productivity in the Nigerian economy was $2.98 in 2011; $3.51 in 2012; $3.78 in 2013, and $3.77 in 2014, according to the National Bureau of Statistics (NBS). In the first and second quarters of 2015, labour productivity stood at $3.50 and $3.71 respectively.  This lags those of South Africa, Algeria, Egypt and other countries with similar GDP size as Nigeria.

In the manufacturing sector, output stood at N836.73 billion in 2013 and N870 billion in 2014, according to data from the Manufacturers Association of Nigeria (MAN).

A research released on December 16 by the United Nations Conference on Trade and Development (UNCTAD) entitled, ‘Technology and Innovation Report 2015: Fostering  Innovation Policies for Industrial Development’, observes that science and technology policy in 1986, revised in 1997 and 2003, failed in reversing the shortcomings of the national innovation system. The reason given is that technology was largely conceived in terms of generic acquisition of hardware machinery and equipment, rather than as a process of building technological absorption capacity.

The survey shows that despite Nigeria’s efforts to enact industrial policy as well as science, technology and innovation framework, there is still not much impact at the moment on the way companies innovate, learn and compete.

“The focus of their activities is in the marketing and distribution of products rather than innovative activities that can help create new products and processes,” the report says.

“The survey shows that Nigerian firms are engaged in incremental learning activities, and often rank their products and processes as new to the local market and not to the region or the world,” it says.

The report also reveals that Nigerian firms encounter a number of problems arising from policy coordination and implementation issues.

It says that industrial and innovation policies in the country, despite their aims, have not yet addressed basic issues of capacity building and infrastructure.

“That is, they still remain largely concerned with articulating objectives rather than addressing grassroots challenges,” it further says.

The report states that a lack of investment into public utility services continues to hinder the provision of good physical infrastructure for industrial activities.

“Particularly, lack of electricity and transport infrastructure has been a hindrance to industrial production since the 1970s, when the issue of power supply was not well-integrated into the construction of large-scale industrial plants,” the UNCTAD report says.

The report, which also considers the technology and innovation situations in the industrial sectors of Ethiopia and Tanzania, says that there are several gaps in the policy-making structure in the three countries, adding that the countries must realise that national vision statements should have a broader scope than just promoting industry, but must extend to tackling poverty, unemployment and urbanisation, among others.

It adds that policies of these three countries often suffer from inconsistencies and incoherence.

It recommends that policy changes should be accompanied by appropriately funded and transparent budgets and staffing of skilled employees to facilitate implementation.

“It is important to bring the private sector into the policy focus and the realm of policy discourse. Countries, such as Thailand, have used policy mechanisms like government procurement as an incentive for innovation. Incentives such as these should be considered,” it suggests.

Poor level of innovation in industries remains a bane in Nigeria’s industrial sector as  some of products moving out of the countries are poorly packaged and sometimes do not pass the test of European economies.

It is also seen as one key reason why the country relies heavily on other countries for machinery.

“The aspiration of every country is to become industrialised. Nigeria cannot afford to continue importing machinery and plants. We need to develop a comprehensive programme that will support local manufacturing. We are at a stage where we need to begin to take tough decisions,” said Rasheed Olaoluwa, CEO, Bank of Industry, at a factory inspection in Ogun State.

ODINAKA ANUDU

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