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Competitiveness or Protection: What Do Nigerian Manufacturers Really Need?

Competitiveness or Protection: What Do Nigerian Manufacturers Really Need?
By Kenneth Jukpor

The productive sector in every nation is usually cherished as the live-wire of the economy, thus, fiscal policies, infrastructure as well as grants are developed to support manufacturers. Despite this important role of the manufacturing sector, in Nigeria manufacturers face numerous challenges ranging from tough economic policies, foreign exchange (forex) issues, poor transport infrastructure, power supply, excessive taxation, inefficient ports, among others.

These challenges have seen the Manufacturers Association of Nigeria (MAN) always in the fore-front of agitations for several regulations and policies to be reviewed. The group has taken on the government to explore the roles and opportunities of indigenous manufacturers in recent developments like the African Continental Free Trade Agreement (AfCFTA), restriction of forex on food items, Customs duties on certain items, land border closure, proposed increase in Value Added Tax (TAX) to 10% by the Ministry of Finance, among others.

Some economic experts have lamented that the government’s propensity to protect indigenous manufacturers with policies and import restrictions would stifle their ability to compete with other producers across the globe, but manufacturers have been quick to buttress that they are subjected to strenuous business environment in the country.

The supply of electricity, access to seaports and their low operating efficiencies, the poor conditions of most of our highways and waterways, and the absence of a credible rail network all constitutes impediments to operating efficiencies of manufacturing in Nigeria, have been highlighted by MAN as factors inducing high cost of production and distribution and rendering Nigeria’s manufactured goods uncompetitive.

It is true that anticompetitive regulations and private commercial practices inhibit competition and the growth that should have emanated from it; because healthy competition would strengthen local capacity and position the players to compete with others globally. While Nigerian manufacturers have said they only want a healthy business environment to allow them produce competitive products and services, some economic experts have lampooned the government for shielding these producers from the competition across the globe.

Speaking with MMS Plus last week on this issue, the President of MAN, Mr. Mansur Ahmed stressed that MAN wasn’t asking for protection as a way of shying away from competition.

“We are asking to be given the necessary environment to be able to compete. What makes manufacturing really competitive is usually beyond the control of the manufacturer. We have no control of the state of infrastructure. We have no control over regulatory practices that affect the businesses or power supply. So, our demand is that these things that impede our competitiveness should be eliminated or reduced so that we can compete. We aren’t running away from competition. We aren’t afraid to compete. What we are saying is that competition has to be on the basis of favourable business environment and a level ground” he said.

The MAN President revealed that the body’s approach to address initiatives by various government agencies which affect manufacturing was engagement.

“Our approach is always to engage them and get them to sit with us to discuss what they intend to see on the economy with new initiatives. We can find a way out to achieve the desired results and reduce the negative consequences on Nigerian manufactures. It is the same thing with the planned increase in Value Added Tax (VAT). We have been discussing with the Federal Inland Revenue Service (FIRS) for a long time on VAT. We have been able to get them to understand the consequences on manufacturing, importation costs and impact of this. I believe that this strategy is what we would continue to utilize as we seek to bring about policy changes that would lead to the growth of the nation’s economy” Mansur said.

Mansur, who was speaking with MMS Plus newspaper on the sidelines during the association’s 47th Annual General Meeting (AGM), also commended President Mohammadu Buhari for the numerous initiatives introduced to grow the nation’s economy such as the Economic Recovery and Growth Plan (ERGP), Presidential Enabling Business Environment Council (PEBEC), and the many Executive Orders aimed at strengthening the productive sector to create jobs and lift Nigerians from poverty, however he noted that the nation’s economy was still fragile.

Meanwhile, despite the numerous complaints from MAN on the state of nation’s economy, President Buhari lauded the group as a valuable partner to government, especially his administration.

“You will all agree with me that last four years have been tough on many fronts. However, MAN has always been there as a partner to provide advice, guidance and support on how best to move this country forward. For instance, your association is duly represented on the Nigerian Industrial Policy and Competitiveness Advisory Council and other relevant committees on board of government institutions. Going forward, MAN will also be represented on the Action committee of AfCFTA that will soon be inaugurated” Buhari said.

Buhari, who was represented by the Minister of Industry, Trade and Investment, Otunba Niyi Adebayo, assured that his administration’s priority is to develop and implement policies that would energize the rural economy.

“We started with agriculture and food security and the sector has the largest and quickest potentials to create jobs across the country both skilled and an unskilled. We started working with monetary authorities on policies that enabled urban based processing industries to patronize rural based protective sector. As a result we have seen increase linkages between millet and silo farmers with beverage producers, between maize farmers and poultry producers and of course, between paddy farmers and rice millers. These are just examples of the opportunities created when players in developed and urban economy support the development of its citizens on a self rural region” he added.

On the aspect of importing raw materials for production, Nigeria manufacturers have equally encountered numerous challenges at the ports despite the introduction of fast track for manufacturers.

Speaking on this bottleneck confronting manufacturers, the Assistant Comptroller-General of Nigeria Customs Service (NCS), ACG Kaycee Ekekezie said, “I initiated the fast track scheme you’re enjoying now when I was in the tariff and trade department. Recall that fast track was introduced for the manufacturers. However, we started noticing that some people were importing used spare parts with manufacturers’ names on the fast track. We saw several cases like this. That was why the fast track facility was shut-down for some time. We came up with Entry on Premises”

Ekekezie, who was representing the Comptroller-General of Customs (CGC) Col. Hammed Ali (Rtd) at the MAN AGM stressed that the Customs would always prioritize Nigerian manufacturers.

Explaining the procedures for applying for fast track at Tin Can Island Port, the Deputy Controller, Enforcement, DC Dera Nnadi said; “Every fast track application at Tin Can passes through my desk. We have a compendium of MAN members that was sent to us and it was also reviewed recently. What we do is that when you apply to us listing the containers you have imported, we check through the compendium to ensure that your name is on the list. Subsequently, we endorse it and send to FOU who escort the containers. The issues arise when the applicants name isn’t on that list or you didn’t pass through MAN to put your name on the list”

Nnadi also admonished manufacturers to take advantage of the Customs Dispute Resolution Units which have been set up at all commands to swiftly address complaints and challenges of Customs stakeholders. He noted that the Dispute Resolution Units comprise senior officers in the various Commands and they meet to resolve issues speedily, usually on daily basis.

Also speaking on opportunities that Nigerian manufacturers could optimize, the President of African Export-Import Bank (Afreximbank), Prof. Benedict Oramah urged Nigerian manufacturers to partner with the creative industries especially the music and movie industries to promote made-in-Nigeria products and services.

Oramah also admonished manufacturers to see the nation’s youthful population as its main asset, hence prioritize labour intensive production.

“Our hope is that the Nigerian manufacturing industry will benefit from the AFCTA. That does not mean that there will be no challenges and that is why making available the $500million to support MAN. That will help them to adjust to the new realities” he said.

Noting that AfCFTA would create a demand for other countries export, he stressed that it was important that domestically, things are done cooperatively.

“We are supporting industrial pacts because such pacts would bridge the gap between the infrastructural deficits we have today and the time we are able to make all the investments to improve infrastructure nationwide. Within those restrictive areas, we should be able to provide first class infrastructure to make manufacturing competitive. We believe that overall, the Nigerian manufacturing sector would thrive and grow under the new arena” he opined.

Globalization has powered economic growth in developing countries such as China. Global logistics, low domestic production costs, and strong consumer demand have let the country develop strong export-based manufacturing, making the country the workshop of the world. Nigeria can copy China by making conscious efforts to grow its manufacturing sector with emphasis on its availability of labour for production.

What the manufacturing sector needs in Nigeria aren’t bans or restrictions to protect investments, but an ideal business environment that would see them compete favourably with their counterparts across the region and the globe.

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