The Nigerian manufacturing sector must become a major driver of growth and jobs, but this requires political commitment and well-articulated policy framework.
In July 2018, Procter &Gamble shut its $300 million consumer goods plant in Agbara.
This was until July last year the biggest US non-oil investment in Nigeria.
Apart from that, Unilever sold its Blue Band brand in 2018, as Dangote relinquished its noodle product. Also, Coca-Cola closed down its Enugu plant. Many factories are barely surviving today owing to very high production costs squeezing their margins and increasing un-competitiveness of many of their brands.
Analysts believe that until the country has a comprehensive, pragmatic policy framework on industrialisation, gains of the past may be reversed, even with the next government.
Ajaokuta Steel Complex has gulped $8 billion public funds without producing one sheet of steel.
The Senate recently approved $1 billion for the behemoth, which is seen by analysts as a total waste of money.
Since 1994, successive governments have claimed that the complex is 98 percent completed, but the remaining two percent has become a hard nut to crack for successive administrations. Muhammadu Buhari’s government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the steel, despite an earlier business case in the last administration showing that the complex could only work if properly privatised.
BusinessDay checks show that Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal , manganese and limestone, among others. Due to lack of operations at Ajaokuta Steel, Nigeria today imports steel valued at $3.3 billion every year.
Frank Udemba Jacobs, immediate past president of the Manufacturers Association of Nigeria (MAN), said over 50 percent of raw materials used in the sector would have been locally available had Ajaokuta been working.
But steel makes say the technology in Ajaokuta may no longer be relevant.
African Industries, for examples, argues that it is better to fund private steel firms than put energy into the resuscitation of Ajaokuta.
The Federal Government says it has already got 11 buyers interested in the complex, but analysts wonder what is keeping it from selling.
Similarly, the Aluminium Smelter Company, located in Akwa Ibom State, is not in operation due to a tussle between Bancorp Financial Investment Group Divino Corporation (BFIG), a consortium of U.S.-based Nigerian investors led by Reuben Jaja, and the United Company RUSAL, a Russian firm.
“We need that resolved. Aluminium Smelter Company needs to be re-started so that we can get ingots for local roofing sheets manufacturers,” Oluyinka Kufile, chairman, Basic Metal, Iron and Steel Group of the Manufacturers Association of Nigeria (MAN), told BusinessDay earlier in an interview.
Nigeria has three paper mills that are not working at optimal capacity. These include: Nigeria Paper Mill (NPM)Limited located in Jebba, Kwara State; Nigerian Newsprint Manufacturing Company (NNMC)Limited, Oku-Iboku, Akwa Ibom State; and Nigerian National Paper Manufacturing Company (NNPMC) Limited in Ogun State.
Studies show that Nigeria loses N180 billion annually from non-performance of these paper mills. Nigeria spends N50 billion on the import of papers annually, according to a research done by Abimbola Ogunwusi and Peter Onwualu, director and former director-general of the Raw Materials Research and Development Council (RMRDC) Newspapers and publishing firms are struggling to import papers with limited foreign exchange, leading to very high cost of paper products.
“The co-investor that bought the NigeriaPaper Mill (NPM) Limited did not buy it to help Nigeria,” said Samson Ololade Ogundele, ex-senior manager, NigeriaPaper Mill Limited, Jebba, Kwara State in Lagos, said at a stakeholders’ forum in Lagos in 2016.
“I know it was valued at about N30 billion in Nigeria as at 1995, but this same mill was given to the investor at N334 million in 2008. The aim of the government in handing over the mill was to create jobs and improve the economy. The majority of Nigerians working in Nigeria Paper Mill –both junior and senior—are all casual,” Ogundele disclosed, adding that the Federal Government must re-visit the privatisation in spite of the fact that it is the only paper mill working at the moment.
As of today, many private companies are either shut down or mired in intractable legal tussles. Vita Malt in Agbara, Ogun State, is shut down. Multi Trex, a 65,000 metric-tonne cocoa processing factory, the largest in the country, has been taken over by the Asset Management Company of Nigeria (AMCON).
In 2015, the only surviving brake pads and lining maker, Star Auto Industries, collapsed as it was unable to compete with cheap Chinese products and could not pay back loan borrowed from the Bank of Industry.
“It is difficult to compete with Asia, with substandard, cheap brake pads. I am not happy that import duty on brake pads fell from 25 percent to 10 percent. This is the situation since 2004 and government has done nothing about it,” CEO of the firm Chidi Ukachukwu, told BusinessDay in early 2014.
Today, only three textile firms out of over 120 in the 1980s are in operation.
In 1980s, the Nigerian textile market was the third largest in Africa, with over 160 vibrant textile mills and over 500,000 direct and indirect jobs. In fact, by 1985, there were about 180 textile mills in the country, employing about one million Nigerians.
However, the fortunes of the sector began to dwindle in early 1990s. Precisely in 1994, many textile manufacturers began to feel the pinch of unstable political situation, massive smuggling and high production costs due to poor infrastructure, taxes and levies, among others.
The situation worsened in 1997, when ban on importation of textiles was lifted. There were so many outcries by industry players and well-meaning Nigerians as they warned of the consequences of that policy.
Inferior imported products flooded the market. Consequently, many big players in the industry could not survive. Many divested to other interests while others leased their premises to other companies. For instance, Aswani Textile leased its premises to Chellarams, manufacturer of dairy products. Afprint, on the other hand, went into oil manufacturing and car business. Enpee Industries became a packaging industry.
Within six years, over 50 companies closed down while about 80,000 employees had lost their jobs. As of today, companies such as Aba Textiles, Asaba Textile Mills, Arewa Textiles, Five Star, Gaskiya, Haffar Industrial Company Limited, SpecoMills, Zamfara Textiles, Millet Nigeria Limited, among others, have all been forgotten when textiles are discussed.
“What we need is the enabling environment. We cannot compete with the level of smuggling and counterfeiting going on now. We used to have about 127 textile firms in Nigeria but that has come down to two or three now,” said Grace Adereti, president of the Nigerian Textile Manufacturers Association (NTMA) in Lagos at a Made-in-Nigeria stakeholders’ meeting in Lagos.
“We had the revival loans but this didn’t work because our biggest problem has never been money,” Adereti said.
Analysts say the sector needs innovation and smart techniques to cut costs. They add that until there is complete implementation of the National Industrial Revolution Plan, the sector may continue to struggle.
ODINAKA ANUDU
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