By Bimbola Oyesola and Charles Nwaoguji

IT was lamentations for Nigeria’s manufacturers on President Mu­hammadu Buhari first year anniver­sary as the administration appeared to have failed to make critical structural changes considered nec­essary for the transformation of the country into the economic giant it is reputed to be.

Today, the sector remains struc­turally weak and basic industries such as iron and steel are not fully in place. The technological base for manufacturing is lacking in the sec­tors. The skilled manpower neces­sary to guarantee competitiveness in today’s dynamic and globalised world is insufficient. Systemic issues of infrastructure, mostly re­lated to power and transport, have led to escalating costs and non-competitive operations.

Some manufacturers, who spoke with Daily Sun, lamented the rapid decline in industrial activities in Nigeria and increasing number of manufacturing entities closing shops.

They described the present situ­ation as the worst for industrial sector in the country as over 320 industries have totally collapsed.

The manufacturers also called on the President to look critically at all factors militating against the establishment, survival and growth of the industrial sector of the econ­omy, including lack of access to funds, poor electricity supply, poor transportation network, unbridled importation of goods that can be made locally, excessive taxation, and overbearing regulation.

But according to the Managing Director of Stella Com. Limited, Mr. Ikpong Umoh, Nigeria’s manu­facturing sector is yet to find a last­ing solution to its various structural problems, resulting in a slow growth rate in terms of output and exports, low level of investment, high con­centration of manufacturing in­dustries in certain areas, resulting to uneven development, technical inefficiencies, poor quality of prod­ucts, and low level of research and development activities which are necessary to be put on positive di­rections for successful implementa­tion of the country’s transformation plan.

Umoh, who also the Vice Chair­man of the Toiletries & Cosmetics manufacturing Group under the ae­gis of Manufacturers Association of Nigeria (MAN), said the manufac­turing sector was greatly affected by government’s policy inconsistency within one year of this regime.

“Of course, the manufacturers made a lot of losses in the invest­ment portfolio which resulted to low income to most of them,” he explained.

He noted, it is well known thing that investment in manufacturing requires long range planning which can only work well with stable and consistent policies.

According to the Managing Di­rector of Biostadt Company Lim­ited, Dr. Emma Ajayi, the long term funding windows to ensure adequate flow of resources to the private sector at a minimum cost not above single digit interest rate to aid proper and effective planning and investment in the sector was eroded.

He said for the real sector to achieve success in the remaining years of his tenure, the government should rather seek to recapitalise the Bank of Industry (BoI) through a form of sovereign funds to be in­vested into it from the excess crude account on behalf of the govern­ment of the federation and in addi­tion to a 0 percent ports surcharge on all imports should be channeled also to recapitalise the bank.

Ajayi, while emphasising the need for effective industrialisation, said, “No country has become rich and moved a huge number of its citizens out of poverty by exporting raw materials and foodstuffs alone without having a modern indus­trial sector supported by a vibrant service. Of course this means shift­ing from trading commodities to higher value products, it means a refocusing on manufacturing and on natural resources.

Also speaking, the National President of Nigerian Association of Chambers of Commerce, Indus­try, Mines and Agriculture (NAC­CIMA), Chief Bassey Edem, regret­ted that over 130 manufacturing companies closed shop in Nigeria within one year.

“It should be noted that the SMEs have enormous potential to create jobs and reduce poverty. A vibrant SMEs is what made China, India, Taiwan among others to become the Asian Tigers. Nigeria can achieve noticeable economic growth through deliberate policies to empower our SMEs to flourish. That is why we are calling on Bu­hari to rescue SMEs.”

He stated that for the manufac­turing sector to move forward, all raw materials with no local substi­tute should have their duties and VAT waived irrespective of the sec­tor or industry type for about four year and machinery put in place to begins production of such materials within a set time frame.

President Muhammad Buhari’s first one year has been assessed as one that saw the real sector badly battered and bruised. The Organ­ised Private Sector (OPS) had had to contend with difficulties in the business environment, especially in relation to insecurity in some parts of the country.

Despite his technical victory in the battle against Boko Haram, bombing continued in the Niger Delta while infrastructural chal­lenges, foreign exchange crisis, funding issues, inconsistency of policy and the quality of institu­tions deteriorated further.

In fact, the first six months after the foreign exchange restriction policy was considered as the most difficult period for operators, who, according to the Lagos State Cham­ber of Commerce and Industry (LCCI), lost about N1.46 trillion in stalled business activities due to paucity of forex. This cuts across the private operators in several sectors, including Fast Moving Consumer Goods, steel, furniture, pharmaceuticals and manufactur­ing.

Stakeholders believe that the un­friendly business environment con­tinued to undermine the capacity of investors to maximise abundant business opportunities in Nigeria, Africa’s largest economy.

But while reviewing the first one year of Buhari’s administration, the Manufacturers Association of Nigeria (MAN), said the uncer­tainty in the year was borne out of the inability of the investors to understand the policy thrust of the administration.

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The association’s President, Frank Jacobs, during the year’s re­view lamented that the sector was already at its tethers end bearing in mind several factors militating against it.

He stated that business in the real sector has been slower, as most companies in the sector are now producing below their capacity.

“It’s been a year of difficulties, more so with the scarce foreign exchange and the restriction policy, though government is now helping us on forex but sourcing it is still difficult and this is impacting nega­tively on our operation,” he said.

What further exacerbated the problem of the sector is the price of crude oil which slumped from $112 per barrel in June 2014 to $35 per barrel in December 2015. The price was far below the budget bench­mark of $53 per barrel for 2015.

Above all, the late passage of the budget, which equally led to its late implementation also contributed to the dwindling fortunes of the OPS.

The MAN President confirmed that the CBN’s policy that barred 41 imported products, some of which are input materials for manufac­turing, from the foreign exchange market has represented huge set­back to the manufacturing sector, though he noted that the members of MAN affected are already look­ing for a way around it to source their raw materials locally.

It was indeed the same forex restrictions that had also prompted JPMorgan Chase & Co. to remove Nigeria from its local-currency emerging-market bond indexes in September 2015, triggering a sell-off in the nation’s assets. As a conse­quence, equity market lost over 30 per cent of its capitalisation mak­ing the Nigerian Stock Exchange (NSE) one of the worst performing equity markets in 2015.

The Lagos Chamber in its Q3- 2015 business environment survey showed that the forex restriction by CBN was one of the costliest policies in Nigeria in recent years.

It stated: “Available data showed that Customs revenue contracted in 2015 relative to 2014. With drastic fall in oil price (currently at $35 per barrel), heavy fuel subsidy bill nearing N1 trillion in 2015, widespread insolvency among state governments across the country, increasing sovereign debt (about $60 billion, including debt provi­sions in 2016 MTEF) and debt service obligation of N1.3 trillion in 2016, the financial crisis may linger in the new year.”

Similarly, the World Bank in its 2016 Annual Ease of Doing Busi­ness Report also ranked Nigeria 169 among 189 countries with Mauritius ranked 32 as the best in Africa. From the report indicators, Trading Across Boarders, which is a measure of a country’s ports/ border management effectiveness, presents a dismal ranking of 182 out of 185 countries.

The LCCI on the issue of forex said the present administration should, as a matter of urgency, review its policy in the foreign ex­change management.

The LCCI Director Gen­eral, Muda Yusuf, noted that the country needs a flexible foreign exchange rate regime that will be equally transparent. “Such policy will bring a more efficient alloca­tion of the country’s foreign ex­change,” he said.

The LCCI DG also said provision of quality infrastructure would have to be given more attention by the new administration if it must succeed in its diversification project.

Positive side of Buhari’s one year

The LCCI boss, however, be­lieves that the anti-corruption battle of the present administration ought to be commended as it has helped to ensure better utilisation of government resources.

“It has reduced as well as pre­vented fiscal leakages through the TSA implementation, which was introduced by the Jonathan admin­istration.”

He stated further that, “a lot of money has also been saved through the appropriate management of the economy and the detection of ghost workers. The country has likewise earned an enhanced goodwill in the international com­munity because of the integrity and sincerity of purpose that the President has brought into political governance.

“The administration so far has been able to confine the main ac­tivities of terrorism to a small geo­graphical area in the North East, which is a positive one on their part and all these have impacted posi­tively on the economy.”