By Bimbola Oyesola
ON assumption of office late last year, the Minister of Industry, Trade and Investment Minister, Okechukwu Enelamah, drew up a blueprint meant to provide a conducive investment environment, having identified excellence as one of the indices needed to rejuvenate the economy.
He also restated the need to strengthen the Micro Small and Medium Enterprises (MSMEs), which he described as the unsung heroes of the nation’s economy.
In a recent media chat in Lagos, Enelammah said his desire was to wean the country off the over-dependence on oil by repositioning it for manufacturing and non-oil export.
He also spoke on infrastructure, the Small and Medium Enterprises (SMEs), the Nigerian Industrial Revolution Plan (NIRP), the restriction on forex and other key economic issues.
These are extraordinary times for Nigeria as a country, its citizens and the rest of us as a government. This is because oil price on which we depend for 75 per cent of government revenues and 90 per cent of foreign exchange earnings has fallen by nearly 70 per cent since mid-2014.
Coupled with this are the knock-on effects from changing conditions in the world’s two largest economies: the end of the era of Quantitative Easing in the United States and availability of higher returns to investors in that country, and the slowdown in China. These are also accompanied by a net outflow of investment from emerging markets. The negative impact of all these on our economy – everything from government’s finances to investment flows to currency valuation – has been significant. Last year, our GDP growth dropped to under 3 per cent – the lowest in 15 years – from an average of more than 6 per cent in the decade between 2005 and 2014. Our foreign exchange reserves are down to their lowest levels in more than a decade. All these issues have created some concern for both the government and the citizens and everybody is worried.
We are working to position the Ministry of Industry Trade and Investment (MITI) to really be an enabler and facilitator of business and investment in Nigeria. We would like Nigerians and the world to regard MITI as the “Ministry of Enabling Environment”. When we say “enabling environment”, we mean one in which it is progressively easier to do business, one whose policies are predictable and consistent. We are working towards developing a business model where the government acts as a partner to business and investment, not a competitor or adverse regulator, and in which there is macro-economic stability.
In the weeks and months ahead, we will be unveiling a number of important initiatives targeted at addressing Nigeria’s consistently poor performance on various global competitiveness and ease of doing business indices. These concrete initiatives will focus on dismantling the many obstacles that stand in the way of business and business innovation in Nigeria. In our estimation, the singular most important enabler of business in Nigeria, that is investment, entrepreneurship and industrialisation in Nigeria – is infrastructure. I’m delighted to mention that work is already going on within the government to create a dedicated fund to tackle our infrastructure deficit. This is apart from the fact that the 2016 budget proposes to spend on infrastructure projects, three times as much as the 2015 budget, despite the tough economic times we are in. I must add at this point that infrastructure refers, not only to “hard” infrastructure like transport networks and reliable power supply, but also “soft” infrastructure like transparent regulation, policy consistency, the rule of law and a culture of efficient collaboration and synergy among various government agencies and offices.
Regarding industrialisation, there is no doubt that Nigeria is long overdue to make the shift from being primarily an exporter of commodities and raw materials, to being an industrial economy. Manufacturing currently contributes only a 10th to our GDP, much lower than it does in other emerging market economies. Our industrialisation ambition is hinged on the Nigerian Industrial Revolution Plan (NIRP), launched by the previous government in 2014. It is now time to move that comprehensive document from plan to action. It is now our duty to implement that plan in light of current realities, taking into consideration the lessons learnt in the two years since it was unveiled. We are focusing on identifying and supporting a select number of industrial sectors in which Nigeria has comparative advantage. We have seen success in our backward integration policies in the cement industry and sugar is currently trying to replicate that success. In the automotive, and Cotton, Textile and Garment (CTG) industries, we are continuing discussions with players and stakeholders to see how we can better implement an industrial policy that creates jobs, profits and prosperity.
Developing the MSMEs
MSMEs are the unsung heroes of our economy, currently contributing about half of GDP and possessing the potential to be even more productive, given the right incentives. Working through agencies like the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), the Bank of Industry (BoI), the Industrial Training Fund (ITF), and the Nigeria Export Promotion Council (NEPC), and in collaboration with other ministries and agencies of government, we will be rolling out programmes and initiatives focused on supporting MSMEs with financing, infrastructure, technical support and training. As part of the Federal Government’s N500 billion Social Protection programme for 2016, over two million traders, farmers and artisans will receive micro-credit, through a fund to be managed by the BoI.
I’m a great believer in being long term satisfied, or what you might call principle of delayed gratification. As a country, are we prepared to delay gratification? Are we prepared to make investment now for a better tomorrow? I think a rational person wants to be sure that the price he is paying now would generate a return tomorrow. So one does not suffer now and still suffer in the future. But once it’s clear as in the situation of improving power supply and the question was pointed at our ministry, whether we are prepared to make some hard decisions, the answer is yes. Look at industrialisation, which most probably is the best example in our ministry, we Nigerians have to be prepared to make some trade offs. The one that will have the greatest impact is to consume what we produce. In other words, if we are willing to make the decision that we will consume what we produce, we know that we will get better with time. It happens in other countries. Germany, Japan, China, they all went through the same circle. But I’m fully persuaded that we will get the benefit later. Speaking for myself and the leadership of my ministry, I can assure you that we are prepared to make tough choices where they are required, and frankly, we will expect that through leading by example we will be able to carry others along. President Muhammadu Buhari has equally spoken about this principle of delayed gratification, that in short term we need to make tough choices for a better tomorrow as a country.
We live in a global world and what that means is that people are properly trained to sell their products. So we have a particular responsibility to ourselves, to ensure that goods are not dumped in the country. This relates to what the Director General of the World Trade Organisation (WHO) told us on his recent visit to the country. That when you are competing with the treacherous players of the developed world, when they are subsidising goods that are coming in here, there is need for caution as such can hamper industrialisation.
There is also the issue of those who bring substandard products into the country and maybe because of price, people may not even know that the standard is not right. You know we have several government agencies that are involved in this, the Standards Organisation of Nigeria (SON), which is under our Ministry and NAFDAC, under the Ministry of Health. I think the important thing is to do it in a systematic way that leverages on technology and all the other things. As I’ve said, if one does not do it that way, there is a risk of one getting overwhelmed. Nigeria is a large country, 170 million people and counting, so we must leverage technology and I know that is one thing that is being discussed and being implemented, whether it’s in terms of work possible custom technology, or in terms of inspection, for both the ones that happened at arrival or the ones even before the goods are shipped. So I think it’s an area where we can do more or where we are doing more, but I would also say, in the spirit of this enabling environment, which we have talked about, that we will have to do it in a way that it would be a service to our stakeholders. Not in a way that it would be seen as adverse or negative.
The restriction comes because of unavailability of foreign currencies since there isn’t enough dollars to meet all our needs.
But it is important at this point to know that every country has a responsibility to manage its foreign exchange and the reason is that one is trying to manage two sides of supply and demand of a foreign exchange. The responsibility we have is to make sure that those two are working in tandem. What I share as our vision, frankly will improve supply, even though in the long term, it would improve export. I wish it were sooner. But it can also improve supply in the short term in terms of foreign direct investment. So one of the things we are engaging in is, how do we create the environment for the investors to bring their money in, including the right conducive environment? And that discussion is ongoing because as you know, the foreign exchange regime also affects the investors coming in, and I’m confident that we will sort out that problem, in terms of making sure that it doesn’t hamper this enthusiasm we’ve seen with investors. We’ve engaged the Central Bank and other agencies of government. However, let me also, in sympathy with other agencies of government, point out that in the short term, with the drastic fall in the volume of the supply of foreign exchange, something has to be done. The question we are asking is what, not whether business can be as usual, it can’t be business as usual, so the question of how do we make sure that raw materials for our industrialisation is available and other things we can give up, may be ostentatious living. But I’m confident we will get there. Like other policies, it will be twigged as we go along.
I believe the supply of dollars will come up as a result of the changing policies of government, especially targeting supply. As a ministry, we are focused on improving supply by foreign direct investment, export, among others.
This is very important. I have been in discussion with the Minister of Agriculture, I can tell you it’s a priority of that ministry and our ministry as well, because we are inter connected. A lot of the efforts going on and policies are geared towards improving yields. I should also point out that the Ministry of Science and Technology recently got support, and this is an existing policy, but it’s been revamped for the Science Technology and Innovation Council, which is supposed to ensure that we are investing in or supporting research. Every nation needs to innovate. I think in the university, the popular slogan is innovate or die, and I’m sure it’s true of every aspect of life. I believe as a country, that’s something we have to do better. The point I would make on that also has to do with investment, it has to do with delayed gratification.
We have to invest in innovation and research. We have to redirect some of our spending to cover research, innovation and investment.