Nigeria’s manufacturing sector has a huge potential to grow and compete with many of its counterparts in most emerging and advanced economies.
The sector is made up of 77 various sub sectors/ industries from automobile to food, down to plastics. These are ordinarily expected to boost economic growth by harnessing the country’s vast array of land and mineral resources.
But despite being exposed to a market with a population of over 200 million people, the biggest in the continent, the Nigerian manufacturing sector is yet to reap the benefit of a large market, and it’s growing only at an average of two percent annually.
Players in the industry are faced with high cost of production and a harsh operating environment, but also the high appetite by Nigerians for foreign-made products.
Recently, it was reported that the Nigerian lawmakers ordered 400 exotic Toyota Camry cars worth billions of naira, after rejecting brands from its own domestic vehicle assembly company, Innoson.
The report put the cost of each of the 2020 models of the imported Toyota Camry cars at an estimated amount as high as N12.6 million.
That’s aside the amount it will cost to get these cars imported into the country.
Using the estimate of N12.6 million, the total amount that will go into the purchase of the 400 cars would be over N5 billion.
That could have gone a long way into boosting capacity of the local car assembler.
And it is not only in exotic goods such as cars, Africa’s largest economy depends virtually on foreign made goods from food items to textile, down to a low as toothpick, leaving its local manufacturers with nothing to cheer.
Whatever the reason might be, while no country in this world can be self-sufficient and not engage in traded (import and export) with other countries, too much dependence on foreign-made products could be detrimental to not just infant industries, but also hurt balance of payments and the economy at large.
Nigeria, for example, spent as much as $1.9 billion on an annual basis on food import bill alone, according to a statement by Godwin Emefiele, CBN governor.
That is not to talk of the huge amount of money spent on the importation of other goods into the country.
Of course, spending huge amounts of money on the importation of products comes with an alternative foregone which is the constant depletion of the country’s foreign reserves that are susceptible to the volatility of oil prices, the country’s biggest earner.
Foreign reserves have dropped to around $34 billion, driven by a fall in both oil prices and production.
Continuous depletion of the reserves to foot the country’s increasing import bill can also limit the CBN’s firepower to keep the naira stable, as importers demand for more dollars.
This could have an even more devastating effect by leading to a sharp devaluation of the currency and push up inflation.
To this effect, the Central Bank has restricted about 45 items from accessing dollars for import from its official window. This was done to limit the amount of pressure on the country’s reserve, and encourage local production.
But restricting items without providing the necessary prerequisite for aiding local production does not hold much water, analysts have said.
To encourage local producers and boost domestic productions, various structural issues limiting the productivity of manufacturers would have to be addressed.
Such structural issues include the provision of power, good roads and bridging infrastructure gap that would improve the flow and movement of goods and services in the manufacturing value chain.
The need to give maximum attention to the manufacturing sector has come to spotlight once again after the Coronavirus pandemic has crippled economic activities across the globe especially in China, the world’s most populous nation, which has been known to be the hub of major import for Nigeria.
Following the closure of businesses in major countries including China, Africa’s largest economy is looking to its local manufacturing sector as the messiah that would help in covering for the production and supplies of goods and services.
Several economic palliatives and funding facilities have been channeled to the sector that would aid in the production of various goods, from food items and medical care products to pharmaceutical products and many others.
The automobile industry has also been urged to produce ventilators locally in order to meet the increasing number of persons who have been tested to have been carriers of the virus.
But for the restriction of entry into most advanced countries and the closure of factories in many countries, these items could have been abroad while the domestic factories would have been ignored.
However, consumers do not necessarily look at who manufactures what before buying. This is why it defies logic to argue that patronage of locally manufactured products should be a matter of patriotism. Consumers all over the world are seeking value at affordable prices, which some of the locally-made products lack.
In a survey carried out by an online medium platform, consumers said they prefer foreign made products over those products made locally owing to standards, affordability and perception.
Some argued that a few of the locally-made products have lower standards. They noted that Nigerians who secure contracts from the government for the supply of manufacturing output are often asked to lower the quality in order for the contractors to make some profit. But this argument holds little water. Yes, some locally-made products are low quality, but Nigeria is also blessed with companies such as Nestlé, FrieslandCampina WAMCO, Promasidor, PZ, Lafarge and many other multinationals with high quality products and zero tolerance for corruption.
Respondents also spoke about perception or discrimination as another reason for rejecting some made-in-Nigeria products.
Most people perceive goods made-in-Nigeria goods as inferior and not up to standards compared to foreign. Frank Jacobs, former president of the Manufacturers Association of Nigeria (MAN),once said that foreign products were of inferior quality and not locally made goods. He cited an example with Nigerian cables which were widely known for quality across Africa as against cables from China or other Asian countries.
Another reason cited was poor advertisement/awareness by consumers. Respondents said most Nigerians are not aware there are goods produced in Nigeria that can satisfy their needs. This, again, is a fallacy of hasty generalisation because Peak, Milo, Bournvita and many other brands are well-known in Nigeria. This point may be true of small brands and firms but not with big brands.
More so, poor after-sales services were also cited as an issue. But to say that this is peculiar to local manufacturers is unfair.
The argument is that patronage must first of all start with manufacturers. Are the products sellable? Can they compete in both local and international markets quality-and price-wise? Consumers are not interested in patriotism but the maximisation of their utility.
Even if patronage is patriotism, why do governments at various levels fail to buy local? The executive bill on this has been flouted many times by government agencies and departments, according to manufacturers, yet no sanctions have been meted to erring officials. Also, the perception or impression that made-in-Nigeria products is inferior is inferior itself. Who produces noodles in Nigeria today if not Dufil, Flour Mills and co? Who produces cement if not Dangote, Lafarge and co? Who makes dairy products if not FrieslandCampina, Nestle, Promasidor and co? This makes the argument about quality one-sided.
