• Wednesday, May 29, 2024
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BusinessDay

This proposed N500 bn Industry Revival Fund

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Akin Yusuf

I recently ran into an industrial technician who specialised in the fabrication of industrial machines as well as installation and repair of air conditioners, fridges and cold rooms. A friend actually introduced us. What immediately attracted me to this young man was his Call Card, which had, boldly inscribed at the back “Trained in Liberia.” Wonders shall never fail to happen! My thoughts indeed went wild, as I kept asking myself, so it is no longer Ghana alone; even Liberia has suddenly become another threat to Nigeria. God Almighty! But this also shows you the extent to which Nigerians seem to have lost confidence, not only in themselves, but also in the country. In any case, would you blame them? Who would stick his neck out for a country, which at the moment seems to practically hold nothing in stock for its citizens?
I later found out that this young Nigerian was not only highly skilled and thorough with his job, but equally committed (you will also agree with me that these are rare attributes for our present-day artisans in Nigeria). He was in a hurry to describe his former workshop in Liberia, which he unfortunately lost to the fratricidal warfare for which Charles Taylor is presently being tried. The workshop, according to him, was fully equipped with necessary gadgets for installations, repairs and services.
Again, while he was at the helm, he also had several other technicians working under him. It is rather regrettable that such a highly skilled Nigerian is today back home and still struggling (albeit without funds and with no one or institutions to help) to set up once more.
As I reflected on the man’s case, the thought of Nigeria’s comatose industrial sector came into my mind. If only our industries were functioning, perhaps one of them might have been in a position to accommodate him; or if only we had viable venture capital institutions, who knows, they might have been in a position to assist him to take off again. Of course, there are several other Nigerians like this young man currently idling away for want of something to do. Their plights have also not improved given that our industries are comatose. It is a pity.
It was while struggling with my troubled state of mind that I read the news credited to the Minister of Commerce and Industry to the effect that government is proposing the injection of N500 billion into the nation’s manufacturing sector essentially to revive it, just as it is increasing the much-touted N70 billion textile fund to N100 billion. The information was released at the Joint Senate Committee on Industries and Agriculture’s public hearing on the collapse of the textile industry.
The case of Nigeria’s Textile Industries has received serious attention, mainly because of their numbers and the number of people they employ. Otherwise, it is evident that perhaps, over 200 industries from different sectors may have closed shop in Nigeria in the past 10 years.
I had stated elsewhere that Nigeria’s Vision 20:2020 will forever remain a dream unless and until we decide to give industry the attention it requires. Evidently, there is no developed country that is not highly industrialised and ours cannot be different. Little wonder why several countries at the beginning of the current economic meltdown ensured that their stimulus packages adequately addressed the needs of industry. For instance, China’s stimulus package included a substantial amount set aside for technological advancement and upgrade of the country’s industrial sector, gearing towards high-end production to move away from the current export-oriented and labour- intensive mode of growth. To this end, the government decided to relieve the tax burden on enterprises, supporting financial credit development, launching enterprise-technology-reform projects, encouraging mergers and acquisition to improve risk forbearance and global competitiveness. As a result, China’s economy, according to the World Bank and in spite of the global economic recession, is still growing at the rate of over 7 percent.

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On its own, India is providing tax exemptions and tax holidays to medium and small businesses, while Value Added Tax has been cut at different levels and across products to increase spending. Similarly, the Central Value Added Tax (CENVAT) was reduced by 4 percent essentially to bring down prices of cement, textiles and cars.
To say the least, Nigeria’s manufacturing sector is highly import-dependent (up to 60%); contributing very little to national GDP (4%); with a growth rate of about 5% coupled with low capacity utilisation; while generating less than two million employments. Obviously, such figures will never enable Nigeria to actualise Vision 20:2020. Hence, the focus of the proposed N500 billion Industry Revival Fund must be to rebuild local industrial capacity, while avoiding de-industrialisation. It is equally important to improve the competitiveness and performance of key local industries, especially vulnerable sectors as well as small businesses. These are mainly sectors with significant employment and labour intensity (like textiles, SMEs etc) capable of impacting negatively on the economy in the event of major challenges.

To achieve this, we must first take a critical look at the numerous ailing industries across the country, with a view to unravelling the reasons for their demise. Having done that, the fund (which naturally should be warehoused with the Bank of Industry) would then be disbursed as a revolving loan at single-digit interest using several commercial banks. At the same time, given that several reasons have led to the poor state of these industries including poor technology, it would also be instructive to promote mergers and acquisition among them. That way, stronger and more viable industries capable of withstanding the vagaries of global completion would emerge.
While I commend the government for coming out with such an initiative, especially at this time, let me quickly warn that I hope Nigerians would not be told sometime in the future that the fund never really existed, as has become the fate of the N70 billion Textile Fund of the immediate past administration.