Monday, August 22,
2016
Manufacturing as a
critical sector of the global economy contributes over $10 trillion to global
Gross Domestic Product (GDP) every year. Despite that the global manufacturing
production has recorded low growth for the last few years with 2.3 per cent in
2015, the annual growth of manufacturing value added still remained around 1
per cent for three consecutive years. Currently, global manufacturing sector is
mainly driven by developing and emerging economies, particularly Asia, which is
dominating the global manufacturing market.
The Asian
countries have seen remarkable growth as a result of their policy of manufacturing
for exports and constructive policies aimed at opening new markets,
implementing favourable trade and exchange rate policies, and attracting
foreign investment through stable governments and respect for property rights.
China, the world's
largest manufacturing nation, is a prime example. Other examples are the four
Asian Tigers - Hong Kong, Singapore, South Korea and Taiwan.
Unfortunately,
Nigeria has not been able to transform its economy through industrialisation,
which is paramount for economic, inclusive and sustainable growth. Rather,
Nigeria relies on the export of its raw and unprocessed commodities to other
parts of the world.
Daily Sun
investigation reveal that the reasons for the minimal success of industrialisation
in Nigeria are due to the inability of successive administrations to
successfully complete and/or carry out effective operations in state-owned
enterprises created to spur industrialisation. For example, the Ajaokuta Iron
and Steel Complex, tagged the "bedrock of Nigeria's
industrialisation", is still not fully operational. Corruption has been
cited as a major factor militating against their completion. Some of its
completed units have been shut down due to lack of funds.
Other contributing
factors to the failure to achieve industrialisation in Nigeria include lack of
funds, lack of power, bad infrastructural base, lack of automation and
technical know how, lack of adequate regulation, global economic recession and
the usual woes that come along with that, such as foreign exchange decline,
unemployment and balance of payment disequilibrium. Economic recession played a
big part in the fourth national development plan's (1981-1985), failure to
reach its industrial policy objectives, which included the promotion of
export-oriented industries, enhancement of value addition through small and
medium scale industries, local sourcing of inputs, and a projected average
growth rate of 15 per cent. All these challenges have made the Asians to take
over the manufacturing sector while pretending to be helping out but busy
destroying the sector.
According to the
President of Lagos Chamber of Commerce and Industry (Lagos Chamber of Commerce
and Industry (LCCI)), Dr. (Mrs.) Nike Akande, "the manufacturing sector
provides the greatest opportunity for the transformation of the Nigerian
economy. It is an antidote for unemployment, a creator of wealth and threshold
for sustainable development."
However, she
explained that the sector's potential has not been fully utilised.
Post-rebasing, manufacturing accounts for 10 per cent of total GDP annually.
"Nigeria's Vision 20:2020, developed in 2009 as an 11-year long-term plan,
envisaged Nigeria's manufacturing sector to be globally competitive, tightly
integrated, contributing no less than 25 per cent to GDP.
Using the
pre-rebasing or post-rebasing figures, it is unfortunate that over a period of
55 years, manufacturing's share of the GDP is still only 10 per cent or less.
Just like the 1980s when a fall in oil prices triggered policy attention back
to the manufacturing sector, the hope is that the recent decline in oil prices
will ensure greater focus on manufacturing, leading to a greater GDP share to
boost the economy. The problem though is that in this era, the infrastructure
deficits and global and domestic economic situations may make it difficult for
manufacturing to have a strong impact.
So what can be
done to revive manufacturing in Nigeria, so that these Asians can be chased out
of Nigeria? The Chairman of Toiletries and Cosmetics Manufacturers Group of
Manufacturers Association of Nigeria (MAN), Mr. Ikpong Umoh, said a number of
actions are necessary, which the President Muhammadu Buhari-led government must
take.
Noting that with
the right macroeconomic stabilisation strategy, business-friendly environment,
improvements in public infrastructure (transportation, power and energy), and
foreign direct investment, Nigeria's manufacturing sector has the potential to
grow more rapidly in the long-term. Other actions include an unrelenting
anti-corruption drive, strengthening national security and revamping human
capital development.
"Nigeria's
vision of becoming one of the 20 largest economies in the world by 2020 is only
attainable when science, technology and innovation are fully integrated into
the national socio-economic development process," he added.
The Chairman of
the group said that failure of the government to take urgent steps in
addressing the challenges facing the indigenous manufacturing sector, these
Asian boys will continue to dominate the manufacturing sector in Nigeria.
Manufacturing is
one of Nigeria's growth drivers. A serious commitment to industrialisation and
manufacturing has the potential to make Nigeria's economy enviable among other
nations, developing or developed. This will only be achieved if Nigeria can get
its acts together and work towards achieving infrastructural development,
inclusive growth and citizens' welfare.
SOURCE: THE SUN