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.