Many manufacturers operate below 20% capacity – Olawale-Cole

Michael Olawale-Cole, vice-president and chairman, trade promotion board, Lagos Chamber of Commerce and Industry (LCCI), says a number of manufacturing firms in the country operate below 20 percent capacity owing to infrastructure and finance challenges.

“Capacity utilisation is not yet what it should be, despite growth witnessed in recent times. The sector is really struggling and you can see this from many factors. Many of them are contemplating moving out of the country to better environments where there is good infrastructure like regular power supply. The cost of borrowing here is very high,’’ he says, adding that the sector cannot be competitive unless governments at all levels provide enabling environments for success.

Lending rate in most commercial banks in Nigeria ranges from 18 percent to 30 percent. Currently, the power generation and distribution capacities are low as many areas cannot be guaranteed two hours uninterrupted power supply in 24 hours. Regulatory pressure is still high, while insecurity is evident in several areas.

The immediate past president of the Nigerian Institute of Management believes that though there is much clamour for internal re-engineering in manufacturing firms, the impediment is often the enabling environment.

“Many of them provide their own water, electricity and other necessities. This puts pressure on cost of production. Again, in other countries, people borrow at 3 or 4 percent, but here is 25 percent to 30 percent. This makes them uncompetitive,’’ he says further.