One of the challenges identified hindering Nigeria’s Gross Domestic Product (GDP) growth is its low industrial capacity. What it simply means is that the real sector, that is those enterprises engaged in the transformation of raw materials into finished products are not performing optimally. Thus they are not able to produce items that meet local consumers’ needs, both in quantity and quality, talk less of being competitive in global trade. Thus, Nigerians find imported or really smuggled in products very attractive to patronize, even if these are overused materials.
Virtually all products used in our homes, both in the urban and rural areas are imported. Be they shoes, belts, fabrics, sewing machines and accessories, hoes, cutlasses, cutlery—in fact, no economic activity in the country goes on without the input of foreign components in part or in whole. So in aggregate terms, Nigeria consumes much foreign finished products, spare parts and machineries, even edible stuffs than she produces.
If truthful statistics is verified, Nigeria is nowhere near 20 percent in terms of utilization of locally produced goods and services. This came to be because when the manufacturers are not complaining about the cost of sourcing raw materials locally, they are crying over the exchange rate of the Naira to the dollar or the interest rate on borrowed funds. When they are not lamenting the cost of power and its irregularity, they are murmuring over the shortage of gas supply to their self-powered plants or the national grid.
When these are not complained about, they are protesting against over-taxation, lack of research and development incentives, or the bureaucracy of obtaining tax rebates or waivers, or the number of regulatory institutions at the ports, or the inaccessible Export Expansion Grants (EEG) of the Trade Ministry, or the number of snakes that eat up electric cables at Nigeria’s numerous epileptic power stations, or the “menacing number”of cockroaches and rats they allegedly render their exportable products in their warehouses useless. They even allege that these rodents defy the spray of Mobil and Baygon insecticides. NAFDAC, SON, CPC, Customs,–virtually everyone it seems is hindering Nigerian manufacturers from performing optimally in this 21st Century digital age of robotics and nanotechnology.
It is because of the above that our import bills rise every year. Even when it reduces, it is only for a short time. That is also why our foreign reserves do not reflect on the strength of the Naira against other currencies. That is why our GDP do not grow steadily, thus per capita income. Because industries cannot innovate and break new grounds in manufacturing new products and utilize optimally local raw materials, jobs are not created with the speed and consistency that ought to follow, and consequently, unemployment, under-employment, low wage and lay-offs afflict the economy, telling on the savings capacity from folks’ empty pockets. You need not talk about insurance or assurance subscription when you don’t have worthwhile bank account. What is the sense insuring a life not worth living.
It is for all these reasons that one must commend the latest CBN determination to empower the manufacturing sector with a chunky N500 billion. This is a hefty enough amount if well administered to real manufacturers, and not just anyone that tags him or herself a manufacturer because he has a registration number from the Corporate Affairs Commission. How to go about this.
One: It is known that Nigerians of all persuasion love free things. The N500 billion intervention is not the first of such intervention for the manufacturing concerns by the government, only this time around the amount is a bit substantial such that if due diligence is carried out by the lending institutions, it ought to make reasonable impact on the nation’s industrial landscape. That is why politicians should not be allowed to borrow from it. Some greedy ones would posture as if they have become as indigenous entrepreneurs as Dangote, and tell the CBN to give them all the money “in order to help diversify our nation’s economy and create jobs for our teeming unemployed”. The CBN should not be carried away by such self-serving invocations. A borrower from the N500 billion fund must show transparent evidence of which sub-sector, and in specific terms, what items he or she intends to spend the borrowed fund on. He or she can only access such after the CBN has conducted due diligence on the claimed manufacturing activity.
Secondly, such business activity must be strictly manufacturing, not “allied services”; whatever they mean by that. Those manufacturing outfits producing products for which the nation currently spends huge sums of foreign exchange due to their indispensability-example:- essential home commodities like pharmaceuticals, textiles, shoes and leather products, local petroleum refining,, cold room accessories manufacturing or whole CKDs because of biting post-harvest looses in the agric chain deserve utmost preference in this regard.There are others too not mentioned here deserving preferential treatment which the Ministry of Trade and Investment should help the CBN or whoever is to dispense the N500 billion largesse identify to guide disbursement.
Thirdly, only those manufacturers who add up to sixty per-cent local raw material into their products deserve to have access to that intervention fund. That way, the fund should be able to reach as many deserving ones as possible. Of course, those states in P.P.P partnership in the much-talked industrial clusters, especially those utilizing any or some of the nation’s many raw material deposits should also be given prompt access without much strictures since the participating state Government in such PPP arrangement stands as ready guarantors. It is much more possible and less cumbersome to execute debt recovery drive against a defaulting state or LGA than from a private concern. All that’s need be done is just trip the value of the debt off the state’s or LGA’s statutory allocations.
There is the need for timelines because of the incessant alarm about the current size of the country’s debts, local and foreign, both by the FG and the states.Borrowers must be given strict timeline within which to conclude transactions and kick off utilizing the fund, with effective monitoring by CBN operatives detailing the beneficiary and how the borrowed facility is being spent. They are not to borrow and trade with the fund on the foreign exchange markets. Some dubious ones whose manufacturing plants have gone to rust since the past ten years would not feel any qualms borrowing all the money in a swoop once they get a sure connection at the CBN to circumvent rules and then divert the money meant for active manufacturers into establishing a chain Bureau de Change offices, or buy all the shares in the now listing MTN or teleology or better still deploy the borrowed fund for sponsoring political candidates in this electioneering season. The CBN must check out for this, for that would be a tragic sabotage of the purpose for which the N500 billion was mobilized.
Due monitoring and diligent recovery after carefully considered timelines and tenor assignment to borrowers would ensure constant availability of money to reach hitherto subserviced concerns. The need for equitable geopolitical spread cannot be over-emphasized, especially for those manufacturing concerns located away from city hubs near banks, but domiciled in the rural and sub-urban places like Aba, Orlu, Sapele, Lugbe, all those whose small holding manufacturing and fabrication activities are filling up the industrial needs of enterprises handicapped to shop for elusive foreign exchange for the needed spare parts and machines.
Nwokoro writes from Lagos via [email protected]