BusinessDay
Nigeria's leading finance and market intelligence news report.

Boosting local manufacturing through improved patronage

Beyond the provision of basic amenities in order to support local manufacturing, patronage of locally produced goods and services is key to encouraging local manufacturers who have, overtime, complained of poor sales and unsold investory.

In the Manufacturers CEOs Confidence Index (MCCI) conducted by the Manufacturers Association of Nigeria (MAN) in the first quarter of 2020, 43 percent of CEOs of manufacturing companies said the level of unsold manufactured products had not reduced in the previous three months while 31 percent said that the Executive Order 003, which mandates the patronage of locally produced goods by government agencies, had not been fully adhered to.

An Aba-based footwear manufacturer turned PPE producer, Johnson Obasi, CEO, Johnsfrank Global Resources Nigeria Limited, in a telephone interview with BusinessDay, said that despite the scarcity of imported PPE, doctors prefer to have foreign PPE than those produced locally.

“One of the major challenges of the PPE business here is that the medical personnel prefer to use the imported/ foreign type of PPE despite its scarcity and high price. Some of them even tell people not to use locally produced face masks, saying it is not in line with the WHO recommendation,” Obasi added.

Experts say Nigerians manufacturers must produce to global standards in order to be competitive. However, many locally-made products are exported to the United States, China and the European Union. Local manufacturers complain of high production costs which they see as disincentives.

The 2019 half-year Executive Summary compiled by the manufacturers association of Nigeria (MAN) shows that the level of unsold goods has been on the rise over the past three years. In 2017, unsold manufacturing goods stood at N321.12 billion. This increased in 2018 by 17 percent to N375.12 billion. It further rose by 7 percent to N402.42 billion in 2019.

In the 2nd half of 2019, the report revealed some factors responsible for poor patronage.

“High inventory of unsold finished manufactured goods in the period was ascribed to low consumption, smuggling, and counterfeiting of Nigerian manufactured products,” the report stated.

A further breakdown of the unsold locally manufactured items revealed that basic metal, iron and steel suffered losses the most, followed by the chemical and pharmaceutical sector. The least affected were the food, beverage and tobacco sector.

Vincent Nwani, investment and business consultant, said to BusinessDay that manufacturers encounter challenges before, during and after production, adding that poor sales volume actually hurt them.

“It is difficult to manufacture goods locally. In addition, poor patronage and dependence on imported goods contributes to the inherent problem. There should be an increase in the patronage of local goods especially by the government in order to boost the country’s manufacturing industry,” Nwani said.

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