Charles Nwaoguji, [email protected]
In its quest for industrialisation Nigeria, has tried its hands on different industrial policies. But indications so far have shown that these policy have hardly helped Nigeria to attain the required level of industrialisation that can make dynamic change in the economic structure of the country, especially as its manufacturing sector has remained below expectation. The policies have a common feature of foreign inputs reliance making their successful implementation in Nigeria very costly.
But experts have argued that the way out of these challenges would require proper conception and implementation of industrial policy, human capital development especially sciences and technical education for skill development, acquisition of relevant technology massive public investment in the provision of roads, rail system and electricity, and completion or rehabilitation of industrial core projects especially iron and steel projects.
Now that the African Continental Free Trade Area (AfCFTA) has come into force, with Nigeria as signatory to it, the policymakers and the business community have been advised to prioritize, develop, and implement smarter local strategies to seize the emerging opportunities in manufacturing and industrialisation across a variety of sectors to increase the the economy’ global competitiveness.
Right now, the state of Nigeria’s industrial policy is nothing to write home about hence its negative effect on the growth and development of the manufacturing sector.
According to experts unless Nigeria gets its industrial policy right, there would little or no opportunities to move forward. They therefore argued that an integrated continental economy would have a larger supply market, decreased trade restrictions, and free movement of people, and manufacturing specialisation will accelerate and make Africa’s industrialisation globally competitive. In their opinion If the AfCFTA is successfully implemented, Nigeria’s manufacturing sector is projected to double in size with annual output and create million jobs.
This is because one of the key objectives of the AfCFTA is to “enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources. Several African countries have made substantial progress in implementing industrial policies, even though more can be done: South Africa’s Industrial Policy Action Plan, which coordinates ministries and policy areas and prioritises industrialisation over trade and other economic goals, has supported the country’s manufacturing sector growth by attracting investment and boosting industrialisation. In Morocco, the government has incentivized a shift within the manufacturing sector toward automotive assembly—a lucrative market—by offering fiscal and tax incentives in some free zones.
Similarly, Zambia offers benefits within its six pilot multi-facility economic zones around the capital, Lusaka, where VAT payments on inputs are eliminated and corporate tax payments are reduced or deferred. This pilot project has already attracted $120 million in investment from different companies. Even if the ultimate responsibility for industrial development lies with national governments that should reduce the cost of doing business, improve industrial infrastructure, and invest in human capital, among other factors, the AfCFTA offers a unique opportunity to increase competitiveness and scale production for a single continental market. But Nigeria’s policy summersaults have continued to frustrate target and industrialisation goals attainment.
According to the National President of Nigerian Chambers of Commerce, Industry, Mines and Agriculture ( NACCIMA), Hajiya Saratu Iya Aliyu,for over three decades now, economic indicators of level of industrialisation in Nigeria have remained unimpressive. Nigeria’s industrial sector has been characterised by high import content of industrial inputs, dwindling capacity utilisation, high cost of production, low value added, declining output growth, low employment generation and inadequate linkages with other sectors of the economy .
For the President of Lagos Comber of Commerce and Industry (LCCI), Mr. Babatunde Ruwase, said the annual growth rate of industrial sector as a percentage of GDP is marginal compared to what is obtained in many countries, including Singapore, Malaysia, Indonesia and South Korea which were at the same level of development with Nigeria in the 1960s and the early 1970s. “The contribution of manufacturing to GDP has been declining instead of increasing. The share of manufacturing subsector output in GDP which was 76.6 percent in 1975 reduced to 38.3 percent in 1985 and 32.4 percent in 1998, which by implication portrays Nigeria’s industrialisation as still at rudimentary level,” he explained.
Thus far, he noted, these policies have not helped to actualise Nigeria’s industrialisation aspiration. First, there had been high cost of production resulting in non-competitiveness of Nigeria’s manufactured goods in both domestic and foreign markets. Secondly, manufacturing production had concentrated on light consumer goods instead of capital goods which sustain industrialization. Thirdly, the performance of industrial sector especially manufacturing, by all indications, had been far below expectation. For industrial sector to develop and perform better.
For the President of Manufacturers Association of Nigeria (MAN). Mansur Ahmed, the Industrial policy should be properly conceived and carefully implemented, adding that the Human capital development should be given priority in the country, with education especially sciences and technical education properly funded for skill development. To sustain industrialization in Nigeria, manufacturing production should begin to focus on the production of capital goods.
The immediate past president of the Association of Industrial Microbiologist of Nigeria (AIMN), Dr. Joy Ehiwuogu-Onyibe said the way out of these challenges are proper conception and implementation of industrial policy, human capital development especially sciences and technical education for skill development, acquisition of relevant technology in the world, massive public investment in the provision of roads, rail system and electricity, and completion or rehabilitation of industrial core projects especially iron and steel projects.
She called on the government make conscious and deliberate efforts to negotiate and acquire available technology in the world in specific areas.
“The acquisition of technology should be a national issue and not a local firm affair. There should be massive public investment in the provision of electricity, roads, rail system and other infrastructure. National security should be strengthened and tightened to curb the activities bad people,” she said. Overall, she said Nigeria policymakers should implement policies that benefit local production and offer enticing opportunities to foreign investment. Investors, on the other hand, should consider where manufacturing inputs can be sourced locally to reduce costs related to transport, import tariffs, and exchange rate fluctuations.