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Industrialisation: It’s a new dawn in Nigeria, says Aganga

By ADE OGIDAN
15 February 2015   |   3:58 pm
Olusegun Aganga, the Minister of Industry, Trade and Investment, has passsion for issues that would actualise the current administration’s transformation agenda. To him, the industrail sector has been experiencing tremendous growth, putting the nation’s economic diversification on the right course. He spoke with Business Editor, ADE OGIDAN. Excerpts. IT’S almost four years now since the…

AGANGA-SEGUN

Olusegun Aganga, the Minister of Industry, Trade and Investment, has passsion for issues that would actualise the current administration’s transformation agenda. To him, the industrail sector has been experiencing tremendous growth, putting the nation’s economic diversification on the right course. He spoke with Business Editor, ADE OGIDAN. Excerpts.

IT’S almost four years now since the then Ministry of Commerce and Industry became Ministry of Industry, Trade and Investment. What would you point to as a major impact of this change?

President Goodluck Ebele Jonathan created the Ministry of Industry, Trade and Investment (MITI) with a vision to promote sustainable and inclusive economic growth, create jobs and generate wealth.

   At the beginning of this administration, therefore, the Ministry set out to achieve this vision through the formulation and implementation of policies and programmes that would attract investments into all sectors of the Nigerian economy, boost industrialisation, increase trade and develop local enterprises.

  With the re-orientation of the staff of the Ministry towards diligent delivery of duties and implementation of policies, MITI, along with the 17 parastatals under its supervision, has been able to deliver remarkable results, in line with its mandate, within the lifetime of this administration. Our mandate cuts across Industry, Trade, Investment and Enterprise and in all four, there have been remarkable changes.

Let’s talk about industry. What have we done differently as a country?

  Here, I would want to start by telling Nigerians what we met

Prior to 2011, there had been little or no focus on adding value to our commodities. There were no clear plans by any Ministry to lead economic and revenue diversification efforts to ensure inclusive and sustainable economic growth. In specific terms, there was no industrial plan for Nigeria, no economic and revenue diversification strategy; there was low manufacturing contribution to GDP, low level of value chain development in different sectors, weak industrial infrastructure and complete dependence on importation and exportation of only raw materials.

  To move the country forward within the shortest possible period, therefore, the Ministry of Industry, Trade and Investment, in line with the Transformation Agenda of the President, developed, for the first time in Nigeria’s history, a comprehensive, integrated and strategic roadmap to Nigeria’s industrialisation – the Nigeria Industrial Revolution Plan. The plan focuses on the sectors where Nigeria has comparative and competitive advantage and has been endorsed by private and public sector stakeholders as a game changer in the advancement of industrialisation in Nigeria. In fact, in 2013, the United Nations Industrial Development Organisation (UNIDO) endorsed the NIRP and, for the first time, adopted Nigeria as one of the two countries in Africa it would work with for the realisation of Africa’s industrialisation goals.

  Unlike other development plans, the NIRP focuses on the supporting structures and enablers, which are vital for Nigeria’s industrialization. They are: infrastructure, skills development, finance, investment climate, innovation and technology, standards and local patronage.

Which other policies, within the framework of the NIRP are being developed to drive industrial growth?

First let me make it clear that sectorial policies have already been developed and launched for Cement, Auto-Assembly, Sugar and Cotton, Textiles and Garments. Policies for basic metals, cocoa, rubber and palm oil will be launched soon.

In the automotive sector for instance, prior to 2012, Nigeria was one of only two nations in the world’s top 10 economies, which did not have an automotive manufacturing and assembly sector; and we spent $6 billion annually importing cars. The Ministry therefore began a robust analysis of automotive sectors globally and began working with international investors and local stakeholders to develop a holistic and robust automotive policy for Nigeria. Following this, the Nigeria Automotive Industry Development Plan was approved by Mr. President in October 2013. Ten days after, Nissan made a public statement endorsing the policy and committing to investing in an auto-assembly/manufacturing plant in Nigeria to supply its Nigerian and West-African market. On May 29 2014, Nissan launched its first SUVs and cars, assembled in Nigeria.

Apart from Nissan, which other manufacturers are in the country and what specific benefits has the country gained from the implementation policy?

  Since its launch, the number of auto manufacturers in Nigeria has increased from four to 22; 10 car manufacturers have started producing and some have even expanded existing low-level production. Nissan, Ashok Leyland, Hyundai, Foton etc have started producing; while Peugoet and Innoson, among others are expanding. Three companies are currently constructing their assembly/manufacturing sites (Kia, Renault and Joylong) while nine companies are in their final stages of pre-investment due diligence (Toyota, Honda, Isuzu, Tata, Skoda, MAN, Mitsubishi, Ford and VW).

  Innoson has produced affordable cars with 45 per cent local content, for instance and investments in the sector have risen from $62 million over ten years (between 2001 and 2011) to $150 million in 2014 alone, with a pipeline investment of $300 million expected by 2016.

 Let me also add that between 2001 and 2010, the automobile industry manufacturing capacity utilisation was 10 per cent per cent. This has risen astronomically to 50.3 per cent as at the first half of 2014.

A lot has been said about the National Sugar Master Plan. How would you assess the plan? After over a year of implementation, would you say it was worth putting together after all?

You will not believe that in less than two years of implementation, a lot is happening in that sector. The implementation is also throwing up a lot of investment and employment opportunities. Prior to 2012, there was no policy or strategy for the development of the sugar sector; only 3,850 jobs had been created in the entire sugar industry; and total investment in this sector was less than $100 million. There were also no sugar research and development facilities, while Nigeria imported 97 per cent of the sugar consumed in the country.

  The launch of the National Sugar Master Plan in September 2012 has, however, led to the creation of 11,492 jobs currently. This is expected to increase to 180,000 jobs by 2016. As we speak, investment pipeline for the sugar industry has increased to $3.2 billion; the price of sugar (Naira/50kg) has fallen from N10,370 to N7,003; and sugar plantations and refineries are being developed in every region of the country, especially the more vulnerable regions of the North (Sokoto, Kebbi, Jigawa, Taraba and Adamawa).

Nigerians are still worried about the price of cement even with claims of achievements in the cement sector. How would you describe developments in this sector vis a vis the expectations of Nigerians?

  To answer this question, we must look at where we are coming from. In 2011, Nigeria had installed cement production capacity of 16.5 mtpa (million tons per annum); the sector had attracted investments of $9 billion; while Nigeria imported 5.2 million tons annually. But today, the cement sector has become one of the biggest industries in the Nigerian economy, thanks to the consistent and successful implementation of the backward integration policy.

This administration has ensured capacity growth in the sector and has provided the right environment for more investments into the sector with the result that today, Nigeria is a net exporter of cement. To this effect, the following have been achieved – increase in installed production capacity by 139 per cent, from 16.5 mtpa to 39.5 mtpa; and increase in investments in the sector by 150 per cent to over $15 billion in 2014. I am happy to tell you that, today, Nigeria no longer issues import licences.

Also, for the first time in the history of Nigeria, Government has regulated the grades and prescribed uses of cement – this is aimed at reducing the risk of building collapse and accidents in the future. The Ministry has implemented this policy through the Standards Organisation of Nigeria.

What about textiles? This used to be a vibrant industry. But today, many textile factories have close down? What is government doing to reverse the trend?

The reverse is actually the case. The textile industry is breathing very well now. We have developed a cotton, textiles and garment policy for Nigeria, which was approved by the Federal Executive Council in December 2014. The implementation of the policy, which started a long time before the formal launch, will lead to a rise in direct employment from 24,000 to 50,000 by the end of 2015 and 100,000 by 2017. It will also lead to an estimated increase in indirect employment from 650,000 to 1,000,000 by the end of 2015, and 1,300,000 by 2017; attract $1.5 billion FDI into the sector in the next five years; and increase seed cotton production from 180,000 MT in 2013 to 500,000 in 2017. Of course, Nigeria will also be able to save $2bn in foreign exchange and increase export earnings to $3bn or 0.5 per cent of the global share of international trade in textiles and garments in five years.

  According to statistics by the Manufacturers Association of Nigeria, industrial capacity utilisation has risen from 46.44 per cent in 2010 to about 52 per cent currently. Capacity utilisation in the textile, apparel and footwear sector has also significantly increased from 29.14 per cent to about 52 per cent.

You will recall that in 2010, the Federal Government introduced a N100billion Cotton, Textile and Garment Revival Fund, managed by the Bank of Industry to reverse the ugly trend of progressive collapse of the textile industry. The BOI in conjunction with the United Nations Industrial Development Organization have appraised the performance of the fund. A substantial portion of it has been successfully disbursed. 

  We have, however, obtained presidential approval for some aspects in the policy such as the conversion of the loan, given to the BOI by the Federal Government for on-lending to CTG companies, into Federal Government’s equity in the bank.This will make it possible for BOI to elongate the period of this fund, which was billed to end in 2017. It further puts BOI in a position to review the interest rate downwards. Already, a number of the beneficiaries of the CTG Fund have had their loan tenor elongated while their interest rates have been reviewed downwards. This will go a long way in alleviating the burden on CTG companies, especially those in the northern part of the country.

   Overall, the Bank of Industry has increased the number of loans approved for industries by 232 per cent, from 272 in 2011 to 902 in 2013; the value of loans disbursed also increased significantly from N38 billion to N150 billion – an increase of 295 per cent.

Lets talk about investments. Where exactly are we? It’s definitely not all rosy with the attendant challenges.

 In terms of Foreign Direct Investment, Nigeria has never had it this good. But the results did not come on a platter of gold. Since the creation of the Ministry and the addition of the Investment mandate, the Ministry has worked aggressively in supporting local investments and attracting foreign investments from global leaders in sectors where Nigeria has competitive and comparative advantage, areas where Nigeria can be number one in Africa and top ten globally. We have told the story of Nigeria the way it should be told across all continents and the result has been stronger confidence. I would tell you that in the last three to four years, the interest and confidence in the Nigerian economy has increased greatly. The Ministry has recorded an unprecedented increase in the number of senior investment and trade delegations from China, France, Germany, UK, USA, Canada, Switzerland, Kenya and Pakistan among others.

According to UNCTAD’s Annual World Investment Report, Nigeria ranked No.1 destination for FDI in Africa in 2011, 2012 and top 3 in 2013. It should be noted that this measurement takes into consideration only net FDI and discounts large investments (acquisitions) by local companies from multinationals. If these investments were included, the net-FDI figure would be substantially greater. 

In fact, the Wall Street Journal’s Frontier market Sentiment index (FMSI), which tracks investment interest from the top 200 USA and EU multinational companies, for the first time ever, ranked Nigeria the number one country of interest globally. I tell you, it is really a new dawn in Nigeria. All we need is sustained implementation of the right policies.

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