By Merit Ibe [email protected]
Industry experts have warned that cost-of-living crisis occasioned by global supply chain disruption may not abate until Nigeria improves on local production and forex crises bedevilling the economy.
According to them, a step towards achieving this target would involve improving the availability of locally sourced raw materials for manufacturers.
When the backward integration policy was initially introduced, geared towards encouraging manufacturers to look inwards in terms of sourcing raw materials for production needs, many firms embraced the idea.
But owing to challenges that have constituted a huge hurdle in the sector, results as well as the resolve of manufacturers to source materials locally have begun to wane.
According to the Manufacturing Association of Nigeria (MAN), this backward integration tilt by manufacturers consequently helped moderate costs that were channelled into other aspects of production like the purchase of production assets and workforce development, among others.
Before now, Nigerian manufacturers managed to improve on sourcing raw materials locally amid challenges. This was in part due to stringent policies contained in Nigeria’s Industrial Revolution Plan, which restricted access to foreign exchange and others which placed a tight lid on the importation of raw materials.
“Since the full opening of the economy, local raw materials and other manufacturing inputs have been relatively scarce and costly. This has also affected the output of the sector negatively,” MAN said.
MAN President, Mansur Ahmed, recently observed that Nigeria’s economic woes have been exacerbated by the inability of local producers to harness local content into finished products.
According to him, Nigeria’s manufacturing sector had become weakened due to over-reliance on imported raw materials.
The MAN boss argument was hinged on the fact that transforming local raw materials to finished products would help cut back on the need to access forex, while also boosting the economy via job creation.
“If we can transform our commodities locally, if we can transform our agricultural products. If we can turn our cotton and other textile materials into the clothes we wear. If we can transform our crude oil into finished petroleum products, we would not have so many issues and we would not be shaken every time the prices of these commodities change because we would still get what we want. It is very important that we bear this in mind.
“Our manufacturing sector is weak because it is dependent on imported materials that we then process. We must therefore scale up or scale down. Our manufacturers have to go back and do the transformation. We in manufacturing need to focus on this issue,” Mansur said.
Deputy-President of the Lagos Chamber of Commerce and Industry, Dr Gabriel Idahosa, described the challenges associated with sourcing raw materials locally as a perennial problem that has handicapped the manufacturing industry for decades.