Manufacturing plays an important role in Nigeria’s economy and continues to do so in every economy. It is an essential aspect that fuels the economy. In major economies such as the United States of America, the manufacturing sector accounts for over 2.20 trillion dollars of the gross domestic product (GDP) or 11.60 percent of the total in 2017 according to the Bureau of Economic Analysis.
The pandemic has wreaked havoc on the Nigerian economy, as it has on most other economies around the world. According to the National Bureau of Statistics (NBS) GDP survey, the manufacturing sector in Nigeria contracted by -1.51 percent in Q4 2020, and by -2.75 percent for the entire year.
One essential step towards repositioning Nigeria’s manufacturing sector for growth and prosperity in 2021 is to reconsider its industrialisation policy. Muda Yusuf, the director-general of the Lagos Chamber of Commerce and Industry (LCCI), made this argument while reviewing the country’s manufacturing sector.
It also generates wealth through trade and promotes innovation, which can include manufacturing efficiencies that aid economic growth, as well as scientific or technological breakthroughs that improve people’s lives.
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Some believe that the Nigerian manufacturing sector is ailing. The productive sector is in a crisis as its average contribution to the nation’s Gross Domestic Product over the past few years has not gone beyond 5 percent. Many years of neglect and maladministration on the part of successive military and civilian governments, coupled with corruption and indiscriminate policy reversals have all conspired to render the manufacturing sector ineffective in terms of productivity.
Successive administrations have failed to implement policies that could create and sustain a vibrant real sector with the result that the impact of the manufacturing sector has not shown progressive growth over the years and its contribution to national growth and development has been disappointingly low.
Recognising the importance of manufacturing, the Central Bank of Nigeria (CBN) has made it a priority to disproportionately support local manufacturing. The CBN has continued to drive accommodative monetary policy steps that will help the economy recover faster by increasing the flow of credit to households and businesses in key sectors such as agriculture, information technology, and manufacturing.
Following the COVID-19 pandemic and the challenges it presented on the economy, some of these policies by the CBN has seen GBfoods complete a N20billion Tomato Processing Factory and Industrial Farm in Kebbi, as well as localise the production of their Bama mayonnaise. In July 2020, the apex bank banned the sale of forex in the import and export (I&E) window to importers of maize into the country. According to the bank, the decision is part of efforts to increase local production, stimulate rapid economic recovery, safeguard rural livelihoods.
More recently, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), has reaffirmed the Bank’s commitment to encouraging companies willing to invest in the Nigerian manufacturing sector to expand the economy.
Emefiele put words into action by hosting the signing of a memorandum of understanding (MOU) between Procter & Gamble (P&G) and Colori for the local production of Oral B, one of P&G’s Oral Care products, as part of the company’s efforts to localise production in Nigeria. The collaboration represents a $35 million investment.
“P&G has indicated to me that this is the first of many such projects and we are ready to support them achieve these localisation objectives”. The CBN governor declared before calling on other multinationals to follow suit and collaborate with partners to strengthen industrialisation in Nigeria.
If there is a multinational brand that deserves support from the Central Bank of Nigeria, it’s definitely Procter and Gamble. “Nigeria remains our manufacturing hub for West Africa. Our operations have generated over 4,000 direct and indirect jobs through our manufacturing operations in Ibadan and Lagos, and our general offices in Lagos.” Adil Farhat, managing director, P&G Nigeria revealed at the contract signing event.
The company made known its focus on collaborating with relevant stakeholders to develop the Nigerian economy whilst creating many job opportunities for the citizens. It’s safe to say P&G is in Nigeria for Nigerians.
The effort and leadership of the CBN in creating an environment where local manufacturing is encouraged is no doubt a step in the right direction. These steps are necessary if we are to return our economy to a sustainable growth path while reducing our reliance on commodity price volatility.
With the progress made thus far on local manufacturing, it is essential to for Federal Government to pay more attention to further rationalise its set of import duties and restrictions to avoid the possibility of arbitrary product reclassification and to align with global cost-per-shipment levels.
The Nigerian Government can also support local industry and create jobs by reducing duties for raw materials and ensuring that the definitions of raw material or finished product are indisputable. Lower taxation and export incentivisation policies of countries, such as China and manufacturing incentives in South Africa, have helped their manufacturers to produce cheaper products.
