The Manufacturers Association of Nigeria (MAN), has outlined its target for the new year during which it hopes to increase the contribution of the manufacturing sector to the country’s Gross Domestic Product (GDP) above the current 8.84 per cent to 15 per cent.
Available statistics show the sector contributed 8.84 per cent to the GDP in the third quarter of 2018, according to the National Bureau of Statistics (NBS).
But President of MAN, Mr. Mansur Ahmed, said the Association would promote a more inclusive economy among all categories of companies in its membership through the establishment of structured and mutually beneficial linkages between the large corporations and small and medium industries to expand the scope of strategic partnership with relevant organisations within Nigeria, West Africa and the African continent.
“We want to substantially improve the manufacturing sector’s contribution to GDP to 15 per cent within the next two, three years,” Ahmed said at a media luncheon in Lagos.
He said efforts would be made to further influence the modulation of economic, industrial, trade and other policies that are germane to the survival of the manufacturing sector in Nigeria.
“We shall substantially improve the contribution of the manufacturing sector to the GDP from the current paltry 8.84 per cent; appreciably increase the capacity utilisation of member-companies by promoting policy consistency in a manner that the gains already made are not pulled back while ensuring the revival of sectors that are currently struggling,” the MAN boss said.
The damaging and scourging effects of smuggling and other trade malpractices was heavy on the manufacturing sector. Our position on smuggling and other trade malpractices such as counterfeiting and product cloning on most of the sectoral groupings in the manufacturing sector has been affirmed by the closure of virtually all the textile manufacturing concerns in the country due largely to smuggling of textile materials into the country. The hitherto manufacturing hubs in Kano, Kaduna and Lagos are now solitary camps with most of their factory sheds now used as event centres and warehouses to store smuggled textile materials. Apart from smuggling, today, unscrupulous Nigerians and foreigners also take well-selling Nigerian products to Asia, mass produce and dump these products into the Nigerian market. This has been a huge challenge to manufacturers as market share, sales and profit continue to dwindle in the circumstance. Of course, these trade malpractices are responsible for sub-optimal utilisation of existing capacity, low investment and employment in the sector.
“We called on the government to set up an anti-smuggling taskforce for surveillance, constant raiding of Nigerian markets and to complement the efforts of the Nigerian Customs Service (NCS) and other agencies at the borders in combating the challenges of smuggling and other trade mal-practices.
Inadequate electricity supply & stranded 2000MW
The challenge of inadequate electricity supply persisted in 2018 and worsened by skyrocketing electricity price. Inadequate electricity supply remains a major driver of the cost of production. A situation where cost of electricity constitutes about 40 per cent of the cost of production and cost of self-generated electricity in 2016 was as high as N129 billion, N117.38 bilion in 2017 and about N43 billion in the first half of 2018, is not manufacturing-friendly. Our survey finding shows slight improvement in electricity generation and distribution with the bulk of the challenges coming from obsolete electricity infrastructure, weak transmission and distribution networks. MAN applauded the current efforts of government aimed at utilising the 2000MW stranded electricity and for the Eligible Customer initiatives introduced in the course of the year. The challenge with the slow uptake of the stranded electricity has to do with the conditionalities for accessing the stranded power, which expects that Eligible Customers should not owe any of the distribution companies. You may be aware of the legal dispute between the association and some Discos over poor management of the Multi Year Tariff Orders (MYTO), which led to the claim by the Discos that our members are owing them. Manufacturers are expectant that government will support stakeholders on the electricity value chain to improve generation, transmission and distribution, intervene in the impasse between MAN, Discos and NERC and resolve associated issues and relax some of the requirements for the uptake of the 2000MW stranded electricity so that manufacturers can leverage on the initiative.
The position of the Association has been verified and validated, evidenced by the ongoing technical review and consultations with the private sector. Already, a Presidential Committee on AfCFTA Impact and Readiness Assessment, that has MAN and other stakeholders as members, is currently working tirelessly to ensure that Nigeria takes an informed decision on AfCFTA if the agreement must be signed. This is in line with the position of MAN, all thanks to President Muhammadu Buhari. The study conducted by the Association is ready and the fact sheet would be circulated soonest. It is, however, pertinent to state that the findings of the study are eye opening.
He said the Association has shared the outcome in several of our recent presentations on AfCFTA and formally presented same to the leadership of the committee earlier mentioned. Evidences now abound that under AfCFTA, import will surge into the economy leading to decline in investment, output and employment in the real sector of the economy.
Therefore, MAN expects that in the coming year government would not just sign the agreement on diplomatic niceties or bandwagon euphoria without thoroughly weighing its pros and cons. It must ensure that the trade agreement that will improve intra-African trade should not be at the expense of industrial and economic diversification aspirations of Nigeria.