In early 2014, economic and development experts gathered in Abuja to launch the National Industrial Revolution Plan (NIRP). Up till today, that document remains Nigeria’s most comprehensive and ambitious industrial plan, as it was prepared by global and local experts who had worked in global development institutions or exposed to development in advanced economies.
At the launch of the document, Goodluck Jonathan, the then president, acknowledged that NIRP was the flagship industrialisation programme ever embarked upon by the country.
“The Nigeria Industrial Revolution Plan is the most ambitious and comprehensive industrialisation programme because it is based on the areas where Nigeria has competitive and comparative advantage such as agriculture and agro-products, metals and solid minerals, oil and gas, construction and light manufacturing services. It has identified those sectors where Nigeria can be number one in Africa and top 10 globally,” he said.
He explained that the goal of the Nigeria Industrial Revolution Plan was to increase the contribution of the manufacturing sector to GDP from then four percent to more than 10 percent in five years.
He further said that the NIRP would address the physical constraints that had consistently inhibited the growth of manufacturing by building industrial infrastructure, prioritising power for industrial use, reducing borrowing cost and mobilising funds for the real sector.
“It will help to build our industrial skills, improve our investment climate, raise our product standards, link innovation to industry and ensure local patronage of made in Nigeria goods,” he also said.
So far, the performance of the NIRP has been mixed. Firstly, the target of achieving over 10 percent GDP contribution from manufacturing may look closer to many, given the numbers coming out of the National Bureau of Statistics (NBS) recently. In the first quarter of 2020, for instance, real contribution of manufacturing to GDP was 9.65 percent, higher than 8.74 percent recorded in the fourth quarter of 2019 but lower than 9.79 percent reported in first quarter of 2019. So, in 2019, which was exactly five years after, the contribution of manufacturing to GDP was 9.79 percent. However, this represents little progress. As of the time of estimating manufacturing contribution to GDP at four percent, Nigeria had not rebased its GDP. Rebasing only occurred two months after the NIRP launch—exactly in April 2014. After rebasing, the contribution of manufacturing was almost 9 percent. With GDP contribution of manufacturing at 9.65 percent in the first quarter of 2020, it is obvious that success has been minimal in this area.
Secondly, though President Muhammadu Buhari’s ministers say they are implementing the NIRP, age-old constraints to manufacturing are still there. Infrastructure such as roads is getting worse and industrial clusters aren’t always getting enough power from electricity distribution companies. There is, however, light at the tunnel with railway reforms across the country, which should help cut logistics costs for some companies. But cost of funds has remained high at double digits. In the second half of 2019, interest rate charged to manufacturers stood at 20 percent, 1.4 percentage point lower than 21.1 percent recorded in the same half of 2018 and 2.25 percent lower than 22.5 percent recorded in the preceding half, according to data compiled by the Manufacturers Association of Nigeria (MAN).
As pointed out by Frank Jacobs, former president of MAN, only very few businesses would survive with that level of lending rate in Africa’s largest economy. Without doubt, the Central Bank of Nigeria (CBN) has raised lending to manufacturers through its own funding schemes and pushed commercial banks to follow suit. Between May and October 2019, Nigerian manufacturers collectively received N459.69 billion from the banks, according to Mansur Ahmed, MAN president, in an interview with CNBC last year. The CBN’s COVID-19 funds are also pointers to the efforts of the apex bank to fund the real sector. But the major problem is accessibility of the funds. Deposit money banks sometimes create impossible conditions for real sector players.
Several aspects of the NIRP are not being implemented. In the automotive industry, for instance, the NIRP specifies the development of auto supplier parks and creation of auto industrial parks, with dedicated ports and berths for assemblers. This has not happened.
The government also pledged to encourage private sector procurement of locally assembled automobiles. This has happened only partly. Patronage for locally assembled vehicles was down to 6,999 in 2017, according to PricewaterhouseCoopers (PwC), as against 555,716 in South Africa; 181,001 in Egypt; 168,913 in Morocco, and 94,408 in Algeria. The attention of government since 2015 has been shifted to raising 35 percent levy and 35 percent duty on imported vehicles, including 30 percent duty on ‘accidented’ vehicles.
Andrew Nevin, partner and chief economist at PwC Nigeria, said in Lagos in 2018 that imported used car segment (Tokunboh) accounted for 74 percent of all vehicle imports, making Nigeria the largest in the world. Ten percent of imported cars were less than three years old, while 63 percent were over 11 years, he said.
Apart from gas industries parks/cities which only exist in the papers, the government in the plan pledged to facilitate the development of eight industrial cities in Nigeria, with a combined land size of 6,000 to 10,000 hectares and 700 to 1,200 megawatts of captive power capacity. Industrial cities were expected to be operating hubs (or delineated areas) where manufacturers could have the required infrastructure and support to succeed, according to the NIRP. But this is yet to happen.
Without doubt there has been progress in agriculture and agro-products, with the previous Agricultural Transformation Agenda and the current Anchor Borrowers Scheme.
The United States Department of Agriculture (USDA) puts Nigeria’s milled rice 2018/2019 production at 4.78 million MT, up over 2.5 percent from 2017/18 figure of 4.66 million MT. Rice production has risen by 1 million metric tons (MT) per annum from 2016 to 2019.
The Food and Agricultural Organisation (FAO) had in 2017 attributed the continuous growth recorded in the country’s rice production to high local prices and inputs assistance programmes such as the Anchor Borrowers Programme. However, cocoa, palm oil and sesame farmers say they are not being funded, complaining they are yet to access any of the CBN funds, including its N50bn COVID-19 Targeted Credit Facility. But one cocoa processor has confirmed getting a facility from the apex bank. Nevertheless, for the industrial plan to make any meaningful impact, according to the initiators, crops such as palm oil, cocoa, sesame and rubber must be properly funded.
More so, there was an initial push by the Buhari administration for solid minerals, but the enthusiasm has died down. Perhaps, the government has realised that a lot of beneficiation needs to be done on solid minerals before making them marketable and that international prices for some of the minerals are volatile. In the oil and gas sector, the country has earned a lot from the industry in terms of revenue, but reforms are still lacking.
Furthermore, the NIRP recognises the importance of housing and construction to industrial development and plans to build 300 units of housing in each state of Nigeria.
However, six years down the line, the 17 million housing shortage figure is yet to change since 2014. In fact, many more are becoming homeless as the population rises by 2.6 percent annually. The Bureau of Public Service Reform (BPSR) said in 2017 that 108 million Nigerians were technically homeless as of that year.
The government pledged in the NIRP to establish an appropriate pricing regime for the electricity industry, but this is far from being a reality today.
“We are sure that there is a need to review of the industrial plan, assess the level of achievement of the plan and project for the next five years,” Mansur Ahmed, president of MAN, told BusinessDay on the phone recently.
“There are areas where the plans have not met expectations in terms of today’s realities and we have to review it to make it more realistic for today’s situation,” he further said.
The NIRP further promises to review the Export Expansion Grant to promote export of finished goods. Up till today, the government is yet to re-start the export grant suspended in 2013.
Also, the NIRP promises to link skills development to real jobs to enable Nigerians to develop competence in areas they can put to immediate industrial use. Part of the plan is to develop skills development boards at the national level, and in each of the 36 states. This has not happened.
More than ever before, many graduates leaving Nigeria’s higher institutions are ill-prepared to compete in the 21st century, with many industries seeking talents from other parts of Africa, Europe, Asia and the America.
“We must re-define our education for the future and tailor it towards what the industry of the future requires,” Ibukun Awosika, chairman of the First Bank, said in 2019 at the Nigerian Economic Summit in Abuja.
