Economy feels pinch as Nigerian products lose market foothold

Nigeria’s quest for economic diversification is taking a knock as locally made products are gradually losing their foothold in the local and international markets.

One key indicator of market performance is the state of inventory of unsold finished products, defined as the stock of manufactured goods that are ready for sale.

Falling inventory implies that more products are being sold while a rising case presupposes that less are being sold or bought.   

Latest data from the Manufacturers Association of Nigeria show inventory which stood at N17.34 billion by end of 2013, rose significantly to N60.62 billion by end of 2014.

Another indication of market performance is the level of investments by players within the sector. Investment is correlated with growth, as rising case indicates a high level of expansion and diversification within the sector.

Investment in the Nigerian manufacturing sector fell from N2 trillion in 2013 to N691.80 billion, according to MAN’s data. By implication, investments within the critical economic driver fell by N1.3 trillion, indicating that fewer funds were pumped in plants and machinery, land and building, vehicles, equipment and assets under construction.

Manufacturers told BusinessDay that there will be higher inventory and much lower investments in 2015 as their products hit a brick wall, owing to the general election and inability of investors to see President Muhammadu Buhari’s economic blueprint, more than three months into his administration.

To cap it all, only 9,487 new jobs were created in 2014, as against 53,340 generated in the manufacturing sector in the previous year, data show.

One factor that has worsened the performance of made-in-Nigeria products is poor patronage, arising from poor perception. Many Nigerian consumers still believe that imported goods are better in quality than locally manufactured products, which, according to findings, are wrong.

“A lot of Nigerians believe that anything made in this country is inferior, which is unfortunate. Our locally made products are not inferior at all,” Frank Jacobs, president, MAN, told BusinessDay recently said.

“Electrical cables manufactured here are superior to Chinese products. In fact, Chinese products are the sub-standard ones we are talking about. This extends to all other products made here,” Jacobs said.

The consequence of this poor perception is that some companies run by Asians in the country place ‘Made in Asia’ labels on their products to woo the majority of consumers who have an undying penchant for foreign products.

“We need to get over this inferiority complex among our citizens. We should be proud and see a product made in the country as our own,” Rasheed Olaoluwa, chief executive officer, Bank of Industry (BoI),  said at a recent factory inspection in Ogun State.

BusinessDay found that the government, which is the biggest spender, does not patronise locally made products, even though it is leading the ‘Buy Made in Nigeria’ campaign.

“This is commonest in the struggling textile industry,” Paul Jaiyeola Olarewaju, director-general, Nigeria Textile Manufacturers Association (NTMAN) told BusinessDay.

“Government often gives out contracts to people who go abroad and import uniforms. Uniforms of the police, the army, the customs and the civil defence should be sewn by local fabrics makers. How can we grow if the government does not patronise us?” Olarewaju asked.

Another reason for poor investments and performance of local products is insecurity in the North-East states of Adamawa, Borno and Yobe.

Already, many manufacturers have either shut their plants or withdrawn their sales representatives in the area.

Similarly, exporters had and are still having a hard time moving their products to other markets, owing to gridlocks in roads leading to Nigeria’s major ports in Apapa, Lagos State.

“It takes time to move our raw materials or products in and out of the country,” Tunde Oyelola, chairman, MAN Export Group told BusinessDay.

ODINAKA ANUDU