Ten manufacturing sub-sectors shunned over policy uncertainty

Investors have refused to put their money in 10 manufacturing sub-sectors as policy uncertainty and lack of technology shut them out of the industries.

Some of these industries are paper, textiles, tyre, toiletries/cosmetics, rug/carpet, paints and tomato processing.

BusinessDay found that no new investor has thrown its money into the textile industry in the last ten years. The few players in the sub-sector are wary, as they are yet to see any clear direction from government. 

The textile industry currently has fewer than six local manufacturers, which is an insignificant number compared with over 70 in the 1980s.  Key players say government is yet to come up with a clear policy that can control smuggling, unbridled importation of fabrics and wearing apparel. Most government security and paramilitary agencies such as the  army, police, immigration and prisons buy fabrics for their uniforms from abroad, as Nigeria is yet to have a law mandating public agencies to patronise locally made products.

“We want to see the market for the locally manufactured goods. Last year, 90 to 95 percent of locally manufactured goods were smuggled, but we want to see a change. Just reduce smuggling by 20-30 percent and we will be good,” Ping-Man Chun, CEO, Nichemtex plc said  at a factory tour by a federal government official in Lagos.

The rug and carpet industry is currently facing a similar challenge with the apparel and fabrics. Local players contribute less than 10 percent of rugs and carpets in the market, owing to lack of implementation of policy checkmating smuggling and unbridled importation. BusinessDay was told that some importers of these products pay less duty than they ought to, in collaboration with corrupt customs officials. 

Kemi Ajibade, head of human resources at Lucky Fibres, said the sub-sector appears to be investor-unfriendly owing to smuggling that makes local rugs/carpets more expensive than those of the Chinese and other countries.

Though the Dangote Group recently berthed the tomato processing industry, the sub-sector is still unattractive, as investors see cheaper Indian and Chinese pastes in the market than those of Erisco Foods, Sonia and other local producers. Dangote’s closure of its new Kano-based plant is also an indication that governments at various levels has no plan on the tomato value chain.

“This is the third year of Tula Absoluta. Nothing was done about it. Do you expect investors to enjoy this type of situation?” Eric Umeofia, chairman of Erisco Foods Limited, asked in an interview with BusinessDay yesterday.

“We are stampeding local manufacturers and allowing foreign, imported and fake products to thrive,” Umeofia said. 

The fish feeds industry currently has no known organised local manufacturer in Africa’s biggest economy. Most of the needs are met by the formulation of feed meal through agro-products such as groundnut mash, soy beans and palm oil. The majority of the local needs are however met by imports.  The industry appears to be unattractive, owing to lack of R&D, technology and knowledge gap, as well as the penchant for patronage of foreign goods, among others.   

“Fish requires all classes of food in order to grow well. The inability to include animal protein in fish meal has made it impossible to have a fish meal company in the country,” Gbola Akande, executive director, Nigerian Institute for Oceanographic and Marine Research, said in an interview with BusinessDay.

No serious investor seems to be interested in Nigeria’s paper mills, as government fails to see this industry as a strategic one that needs emergency.

Apart from the Nigeria Paper Mill (NPM) Limited located in Jebba, Kwara State, which is the only one producing  ( and is operating at very low capacity) the two others, the Nigerian Newsprint Manufacturing Company (NNMC)Limited, Oku-Iboku, Akwa Ibom State; and Nigerian National Paper Manufacturing Company (NNPMC) Limited in Ogun State, are not working. Newspapers and textbooks makers import almost 100 percent of their products  because the country is yet to utilise and develop enormous pulp and paper materials (fibrous and non-fiborous) in the available locally, according to Ukana Akpabio, professor of chemistry at University of Uyo.

Despite hugely available palm oil in the eastern part of the country, vegetable oil is still hugely imported owing to the poor doing business environment and lack of incentives in the sub-sector.

The Local Content Policy in the paints industry, which mandates oil firms and government agencies to patronise local manufacturers,  are not being fully implanted, thus pushing investors out of the struggling sub-sector.

“Generally, investors are afraid of changing policies and policy somersaults. They want to see direction and a better business environment. They also want to make sure their products will be bought by consumers with purchasing power, which is not really the case now,” said Ike Ibeabuchi, CEO, MD Services Limited.

ODINAKA ANUDU & JOSEPHINE OKOJIE