Nigeria’s Products And Non-competitiveness
GIVEN the several factors assailing Nigeria’s locally manufactured industrial products and making them less competitive in the global market, the Manufacturers Association of Nigeria (MAN) has justifiably called for a massive investment in infrastructure upgrade in order to accelerate growth in the manufacturing sector and the economy.
The manufacturing sector is among the hardest hit by the poor electricity supply in the country. Scores of industrial manufacturing plants that flourished in the 70s and 80s across the country have closed shop. Many multinational firms relocated to the neighbouring countries where better prospects exist for manufacturing while the few remaining firms are finding it extremely difficult to remain in business, a situation that does not augur well for the economy.
MAN listed its members’ challenges to include inadequacy of physical and socio-economic infrastructure, shortage of skilled manpower, multiple taxes, and trade malpractices like smuggling and counterfeit products.
The Director General of MAN, Remi Ogunmefun, explained that high cost of funds, insecurity, difficulty in utilising the negotiable duty credit certificate by non-oil exporters under the Export Expansion Grant (EEG) scheme and overlapping functions of regulatory authorities in the regulation/certification of some products also hamper the competitiveness of the sector.
According to him, the setbacks resulting from the challenges in the manufacturing sector have impeded the competitiveness of Nigerian products and rendered such outputs unattractive in the global market. He stressed that since the success of Nigerian economy depends largely on the success of the manufacturing sector, the Federal Government should repair the main arterial trade routes in the country, emphasising a point which this newspaper has repeatedly made that there is need to explore the alternative of constructing concrete-based roads, as they last longer, with less maintenance requirements.
Certainly, the pitiable state of manufacturing in Nigeria has elicited lamentation over the years with little resultant improvement. For instance, earlier in the year, the Steel Manufacturing Group of the MAN threatened to shut down production over the high electricity tariff its members are forced to pay amid unending epileptic power supply in the country. Citing lopsidedness, the MAN group warned that the new Multi Year Tariff Order (MYTO 2.1), which became effective on January 1, 2015, was paralyzing most companies in the country.
The group then tasked the Nigerian Electricity Regulatory Commission (NERC), to go back to the old MYTO, which was initially scheduled to run till 2017as they lamented that the differential tariff from one DISCO to another constituted a disadvantage to market players in terms of competitive sales.
Besides, available statistics show that while Nigeria is demanding N28.28 per kWh as minimum unit charge, other African and industrialized countries such as China, India, Russia, USA, Canada and Angola, demand as low as N21 per kWh as their minimum price. The differential price among competing countries places the Nigerian manufacturers at a disadvantaged position.
It is noteworthy that low power supply alongside its exorbitant cost is just one of the factors hampering industrial production in Nigeria. A combination of other factors interplay to frustrate manufacturing and kill the economy. Poor transport infrastructure, which includes lack of functional railway system for bulk cargo haulage remains a critical one. A lot has been said about revamping the railway system since 1999 and a lot of money spent without success even as it is a well-known fact that railway plays a critical role in economic development.
In the absence of railway, the entire haulage sector is dependent on the highways. Unfortunately, the highways are dilapidated. Rather than enhance industrial production, they increase the unit cost of goods. Time, money and lives are regularly lost on those highways. Perhaps,
the woes besieging the industrial manufacturing sector were partly captured in the recently released 2015 Ease of Doing Business Index by the World Bank, which ranked Nigeria 169th out of the 189 economies covered.
Certainly, goods manufactured in an economic environment where the laws and regulations directly affecting business transactions are obstacles cannot compete effectively with those from economies where doing business is easy.
The unfavourable social and economic conditions in Nigeria is a challenge the current government must rise up to and surmount. The mass unemployment plaguing the country can only be tackled with a buoyant manufacturing sector. Government should therefore work hard to remove those factors hampering industrial production in the country.