‘Buhari needs to urgently jumpstart economy through diversification’
Dr. Frank Jacobs is the ninth President of the Manufacturers Association of Nigeria. Before his elevation, he was the association’s Vice-President, Enugu Zone and Chairman of the Imo-Abia branch of the association. He was also a member, MAN Corporate Affairs and Strategic Planning Committee, as well as Executive and Finance and Establishment Committee of the association from 2010 – 2014. Jacobs studied at the Incarnate Word College, Santonio, Texas, USA (now University of the Incarnate Word) and graduated in 1978 with B. A. Chemistry (Magna Cum Laude); awarded PhD (Analytical Chemistry) by the Washington State University, Pullman, Washington, USA in 1982; Fellow of the Institute of Chartered Chemists of Nigeria (FICCON); Fellow of the Chemical Society of Nigeria (FCSN) and post-doctoral Fellowship with the University of Calgary, Alberta, Canada 1982-1983, before joining old Dominion University, Norfolk, Virginia, USA as Assistant Professor of Environmental Analytical Chemistry 1983-1985, when he returned to Nigeria to establish the winery. Jacobs also worked at the University of Port Harcourt as a visiting scholar in 1983. His research interest has contributed immensely to the development of appropriate technologies essential for the industrialisation of Nigeria, particularly, his current research on the utilisation of locally available fruits for the production of beverages, production of chemicals from sawdust and coal. He has lately designed waste treatment scheme, which neutralises waste water arising from various parts of a winery and therefore, environmentally safe. In recognition of his contribution to the development of Nigeria, Jacobs was honoured in 2007 with the national award of Member Order of the Niger. In this interview with EMEKA ANUFORO, he speaks about the economy and how President Muhammadu Buhari needs to urgently jumpstart the economy through diversification, the task before the new Ministers, among other issues.
It took the President about five months to nominate his Ministers. Are you comfortable with this delay? Did this harm the economy in any way?
The President had his plans and he wanted to take his time. You are aware that his major concern is to fight corruption. So, I think he wanted to be sure of the people he was nominating. Of course, the delay had some negative impact on the economy but the important thing is that we have ministers now.
How can governance be re-positioned for positive change, considering the change mantra of the current government?
Governance can be re-positioned for positive change through a number of ways. First, is to curb wastages in government. The system we are operating is too expensive. After recurrent expenditure, there is little money left for capital expenditure. This has been the bane of our democracy and why we have continued to suffer from dilapidated infrastructure. Corruption in governance has been a major challenge. If all these are addressed, we should move forward. Some of the issues are constitutional and need a review of the constitution.
It has become obvious that the nation’s economy can no longer continue to depend on oi. What does government need to do urgently to jump-start the economy?
The need to diversify the economy, away from a mono product such as oil, has become imperative and urgent in view of the challenges the country is passing through in its foreign exchange earning as a result of the downturn in the price of crude oil in the international market. Other sectors of the economy should be given priority attention. We are aware that the manufacturing sector, if nurtured appropriately, has the greatest potential for wealth creation, employment generation and technology acquisition. It’s contribution to the GDP can become very significant as it is in many advanced countries, and through the export of manufactured products can significantly improve the country’s foreign exchange earnings in place of crude oil. So, you see that manufacturing has the potentials of improving the well being of the populace and soothing the country’s internal challenges as well as providing the much needed foreign exchange.
Governance can be re-positioned for positive change through a number of ways. First, is to curb wastages in government. The system we are operating is too expensive. After recurrent expenditure, there is little money left for capital expenditure. This has been the bane of our democracy and why we have continued to suffer from dilapidated infrastructure. Corruption in governance has been a major challenge. If all these are addressed, we should move forward.
What policy direction would you want to see that can positively leapfrog the production sector?
I believe that a number of things can be done. Infrastructure challenges, especially power, should be tackled. Of course, other aspects of infrastructure are equally important but giving a scale of priority, power should be given preference because it is a major contributor to the high cost of production we are currently witnessing as well as the corollary challenge of non-competitiveness of Nigerian products. Another very important infrastructure that is in disrepair is the nation’s road network and should be given priority attention.
Secondly, adequate incentives should not only be given to manufacturers but such incentives should be implemented. There are a number of incentives, which the government has outlined in its industrial policy but many of them are not implemented. Take the case of the export expansion grant and the NDCC which was promulgated to enhance export of non-oil manufactured products but which has been undergoing review for a long time now and therefore suspended. Exporters are stranded because of this suspension and money tied down as a result is colossal.
The value of the Naira has continued to witness a downward movement. Do we listen to foreign organisations like the International Monetary Fund and European Union, which have asked for further devaluation? If we can’t devalue, could re-denomination be a solution, considering the Ghana’s experience?
I think the government is wise enough not to listen to foreign organisations like the International Monetary Fund or the European Union, because the policies they are pursuing are meant to serve their own interests. We know our problems and should devise ways of solving them. The EU, for instance, is after an extension of its market territory and therefore proposed a trade agreement with Nigeria, knowing quite well that we are at an unequal level of development. Nigeria should not devalue or even re-denominate the currency because that is not our major problem. We should find ways of diversifying our economy and increasing our export earnings.
Former Lagos State Governor, Raji Fashola, is saddled with three key portfolios- power, works and housing. Do you consider this healthy for a government that is eager to hit the ground running?
The President has the best information about Fashola, considering his performance in Lagos State as Governor. However, we expect that he will perform if Nigerians do not try to pull him down. There are so many diverse interest groups in Nigeria. Some of them are not interested in the public good but in fostering their personal interests. We should also remember that Mr. President is trying to reduce government expenditure and has reduced the number of ministries. I believe also that each arm of that ministry will have unit heads that will eventually report to the Minister.
How do you see the transfer of Budget Office from Finance Ministry to National Planning? Is the way to go?
It really does not matter where the Budget office is located. Budget office is an integral part of National Planning. I think the important thing is that the government knows what it is doing and that each ministry plays its part well. Secondly, there should be adequate synergy between Ministries, which should be working together. Perhaps, Mr. President thinks the movement will reduce corruption in the system.
There have been several issues around rice import quota and local production. There are also talks about banning rice import by the year 2017. How do your members feel about this?
Over dependence on imports generally is not good for any country more so if such a country has the capacity to produce locally. The effort to encourage local production is good. There is nothing wrong in it. Our members who are into rice production will work towards getting their raw materials locally. They can empower farmers and out-growers as those in some sectors are doing currently. The point really is that Government should be consistent in its approach and policies so that people do not go into massive agriculture as was done in the 80s, only for the policy to be abandoned. For a country’s food security, we cannot over depend on imports. The policy direction in MAN currently, as a matter of fact, is that manufacturers should look inwards for their raw material inputs and reduce importation of raw materials.
The need to diversify the economy, away from a mono product such as oil, has become imperative and urgent in view of the challenges the country is passing through in its foreign exchange earning as a result of the downturn in the price of crude oil in the international market. Other sectors of the economy should be given priority attention.
Secondly, a comprehensive backward integration policy for major sectors of the economy will propel development in local sourcing and utilization of raw materials. Past experiences with cement production which increased production from two mmt in 2002 to over 28 mmt as at today as well as sugar which, with the Nigerian Sugar Master Plan, witnessed a substantial increase in sugar production with the cultivation of over 250,000 hectares of land for sugarcane production.
What are the low hanging fruits on the power sector that could immediately be championed by the new Minister? What are your thoughts on tariff, embedded generation, among others?
The low hanging fruits will be first to review the contracts signed with the DISCOs which seem not to have the capacity to perform as it is evident that there are challenges in their operations. There is need to introduce micro grid or community grid system. It may be true that DISCOs are facing infrastructure challenges, like others, and the solution cannot be the hike in tariff without a corresponding rise in supply. Perhaps, more players with requisite capacity should be brought in.
Nigeria still has issues resolving gas-to-power scheme. We sell gas to neighbouring countries, yet we are unable to guarantee gas to the power sector. What is the problem with gas-to-power in Nigeria, and what are the immediate solution to this and other issues plaguing the sector?
The issue appears to be hydra-headed. The issue of pipeline security is there while the issue of disruption of the production process of oil companies is also there. Non-implementation of the Gas Master Plan fully is also there. Unless these are addressed, gas to power may be difficult to achieve. Embedded generation is supported, as it will increase the generation capacity of the country. However, transmission must be overhauled and improved, as improved generation without corresponding transmission capacity is useless. It is said that charity begins at home. How can we sell gas to neighbouring countries when we don’t have enough for domestic use.