Manufacturing faces bleak future in Nigeria, needs right president to emerge in 2023 polls
February 13, 2023143 views0 comments
By Business AM
ROMMY ANYANWU, lawyer, industrialist, and former chairman of the Manufacturers Association of Nigeria (MAN), Imo/Abia branch, and a national council member for eight years, resides in Aba, Abia State. In this telephone interview with SABY ELEMBA, he tells Business A.M. that the future of the manufacturing sector of Nigeria’s economy is bleak, and that the way out is to get good leadership for the country.
You were once the chairman of the Manufacturers Association of Nigeria, Imo/Abia branch, and a council member for eight years; can you tell us the progress so far made in the manufacturing sector in your zone for the past two years or more?
- Economist sees emerging political order reshaping Nigeria’s future
- Nigeria sees inflation hit 17-year high at 21.91% in February 2023
- 24.8 million Nigerians risk starvation in 2023, FAO warns
- Federal govt. fixes May for 2023 population census
- Microsoft, Google in head-to-head battle for AI chatbot future
I thank you for this question. The issue is, for the past two years or more has there been progress anywhere in any sector in Nigeria? Clearly, the answer is no. The manufacturing sector is not operating in isolation, we are operating within the Nigerian context. And in the Nigerian context, every sector is suffering. Suffering from insecurity, suffering from a bad economy, suffering from a very high exchange rate and even getting the forex is very difficult. It’s only when you have enough naira, you will be able to get the forex. So, all these things are affecting the economy and the manufacturing sector. So, in the past two years the manufacturing sector has not fared well.
The majority of our members are only managing to sustain their firms. In terms of making profit, they are not. How you know a sector that is doing well is when there are expansions. If I have a factory that is of a capacity of 25 metric tonnes, after operating for three to four years, I turn it into 50 metric tonnes, I am developing and making profit. But when I am shrinking from 25 tonnes, I bring down my production capacity to 15 tonnes, then you know that all is not well, and that I am not making any profit.
As a manufacturer and being aware that this is the general challenge facing the manufacturing sector in the country, can you think of some measures or solutions?
My view is that the leadership of the country will be a major solution to a majority of our problems. If you have a good leader with a good direction, then the solution will trickle down. That is all the solution. All the bla, bla, bla the politicians are making is affecting us directly in our operations and in our homes.
In Nigeria now, do you know how much a litre of fuel is costing? It is over N450 and I cannot even see it [to buy]. You can’t even see the money. So, that is the problem affecting everybody. Public energy supply is not regular, so you have to use the alternative.
Before, generators seemed to be the alternative to public power but now, the public power is the alternative to private energy. And diesel is selling for more than a thousand naira per litre. My brother, how will you survive? And the people that are buying your goods are incapacitated, they do not have the financial capacity to buy.
In this situation, can the manufacturing firm produce much?
How can this be [possible]? If you are not producing much, you are not going to meet your other obligations. If you produce more, the people will say no and they will not buy because they do not have the money.
From your observations, have there been foreign investors in the South East in the last two years?
Investors? My brother, you have not talked of local investors, you are talking of foreign investors. The operating environment is not conducive, how can you get investors? We don’t have a conducive environment for manufacturing to thrive. So, there is no way anybody who is rational will bring his money to investment in an area that is not conducive, that is my simple answer to it.
Then none is coming, the ones we have are shrinking. If you look around, how many new factories have you seen? You rather see hotels coming up. And many of those hotels have been leased and some placed on outright sale and nobody is coming. That is the issue. No sector works alone.
Manufacturing is the hub. They produce goods, they convert the raw materials to goods, then these goods are distributed. In the course of the distribution, they are employing people in the supply of the raw materials, they are employing people in the haulage industry, employing the workers that will turn around the raw materials and process them to finished products. At the end of the day, it is when you get this money that you can now go to the hotel and relax or you are on a business trip you go and relax. But when these activities are lacking, like in a chain, you remove one knob in the chain and it doesn’t flow well. So that’s what we are saying.
We tell them that all these high rise buildings you are building, one day they are going to collapse. If somebody is not comfortable, he is not coming into a hotel. And technology is also affecting them. Like you can now stay here and pay for your raw materials in Kano; you make your transfer, and they will bring the goods to you. So, it reduces their own activities because if the person does not come here, he is not going to sleep in a hotel. So, that is the whole situation.
Is the bulk of the solution for the government to put in place a healthy manufacturing environment?
Yes, 80 percent of our activity is controlled by the government. You know we don’t have strong institutions here. It is the government that drives everybody. If the government goes right, everybody goes in that right direction. We are running a kind of monopolistic economy where the government is all and all. You see, if the government does not bring their budget, everywhere will be silent. That is the worry.
Check other climes where you have very strong institutions, if the government is doing their own, those other people are doing their own and everybody does not look at the Presidency, everybody doesn’t need to look at the governor. Those are the things we have not gotten right. It is all about leadership. If we get a leadership who understands that everything must not lie on the way he thinks, or on the way he feels, things will move on. And the president will understand that the Nigerian economy is a competing economy with other economies of the world. He will start to see what it is that the Malaysian government is doing well that we are not doing. Why are they doing better than Nigeria?
Let me not go far. Ghana here; you remember I was a national council member of MAN for eight years. Majority of our members will close their shops here and relocate to Ghana. Mechelin did it, PZ did it, Lever Brothers (now Unilever) did it, all the factories they had in the Aba area are all warehouses now. They relocated their operations to Ghana. So, our government should look inwards and say what is it that we are doing, why are we not doing better than other economies of the world?
Where do we then start?
First of all, we have to tackle this power issue. We cannot talk of manufacturing without having a stable, consistent, quality energy supply. If we have energy constant, 24 hours energy supply. I was in Ghana sometime, the three to four days I stayed there, they only took light on one night, around 2 a.m. Before then, they announced that the light would go off around 2 a.m. and that within one hour it would be restored. And at exactly 3.05 a.m. the light came back. I am telling you. And that is how it should be.
So the motor man in the village can use the light. The vulcaniser on the roadside can use the power, so it has a multiplier effect. You see that we are jokers. So, I don’t see us going this way. It is just a question of time [and] the economy will collapse.
If we make a mistake in this election to vote for a bad person or a wrong leader, we are doomed. If you go to the airport and see the number of Nigerians going out you will be surprised. Almost a quarter of my friends have all left for the UK, US, Canada, Australia, etc. They said for how long can we continue to be here in Nigeria, the way it is run. And you don’t blame anybody, it is like the same thing we are talking about, the operating environment. If the environment is not accommodating, you are not making progress, if you have alternatives, then you have to. We have a long way to go.