Nigerian manufacturers say an urgent intervention from the Muhammadu Buhari-led administration is key, if the country is to raise the non-oil sector’s contribution to gross domestic product to 20 percent.
The non-oil sector’s GDP contribution must hit 20 percent if it is to create sufficient jobs for about 24 percent of the country’s 174 million population, diversify the economy and help shore up the foreign reserves, experts say.
Manufacturers insist that certain steps must be taken if this goal is to be achieved. They say these include addressing issues such as the pervasive gridlock on the roads leading to Nigeria’s two major seaports in Apapa, which slow down capacity utilisation in factories across the country, on account of late arrival of raw materials.
They add that government must provide export incentives, and that transnational trademarks and infrastructure will cut cost and fast-track creation of five million additional jobs within the next four years.
Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group (MANEG), said hitting this target must start with reinstating the suspended Export Expansion Grant (EEG) scheme, to increase the level of exports and production and also to save exporters who borrowed money from financial institutions with the expectation that the government would pay back.
“I believe there is a need to look closely at the suspended incentive,” Oyelola said, in an exclusive interview.
“Incentives are given to exporters in Brazil, China and other countries. That is why they are well ahead of us. Secondly, some manufacturers borrowed from their bankers with the NDCCs as security, but due to the suspension of the EEG, the bankers have been forced to ask for additional and better collaterals, thereby pushing those manufacturers into further distress,” he added.
Oyelola said government should intervene quickly to resolve the Apapa gridlock, as the area remains the gateway to the export sector and economy of Nigeria.
He admonished setting up a cabinet rank committee in collaboration with the Lagos State government to fast- track efforts to remedy the transportation challenges in Apapa.
He called for an ECOWAS railway and transnational trademark for goods produced within the West African region.
Frank S.Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN), said as Nigeria targets more non-oil export volumes to bring in foreign exchange, attention should be drawn to the need to review the EEG guidelines and acceleration of ECOWAS Trade Liberalisation Scheme.
In a press conference held on Tuesday in Lagos, Jacobs pointed out that deepening Nigeria’s manufacturing sector must begin with consistent financial policy that will not destroy the manufacturing sector.
“If the productive sector continues to find it difficult to procure necessary raw materials and spare parts within the next few weeks, closure and retrenchment may become inevitable,” Jacobs warned.
Nigeria’s free-falling foreign reserves of $30.7 billion (July 22 estimate) were down 20.9 percent from $38.8 billion 12 months ago. This is mostly attributed to the weak non-oil sector that currently brings in meagre foreign exchange, thus failing to contain uncontrolled demand for foreign currencies.
Nigeria exports cocoa, rubber, plastics, hides and skins, tin, copper, leather, oil seeds, grains, plants, tobacco, aluminium, edible fruits and nuts, among others, to several parts of the world. The Netherlands is Nigeria’s largest trading partner in terms of volume.
Non-oil exports declined significantly to $2.43 billion in 2014, from $2.97 billion recorded by the end of 2013, data compiled by Cobalt International Services and released by the Nigerian Export Promotion Council (NEPC) have shown.
“You cannot expect any difference when the only incentive for the sector was suspended unofficially,” said Ede Dafinone, CEO, Sapele Integrated Industries, in an exclusive interview.
“This is a scheme that raised the non-oil export value from $700 million in 2005 to $2.9 billion in 2013. So, tell me, why should we abandon it?” asked Dafinone.
However, the sector, which is made up of primary, semi-finished and finished products, currently contributes about 0.005 percent to the GDP, signifying that it cannot yet be relied upon to achieve inclusive growth, generate jobs and deepen the economy.