Three major things manufacturers need to scale in the New Year
As the year 2022 kicks off, business owners and manufacturers would be making plans to scale and be more productive than the previous year, particularly in terms of revenue and profit-making, capacity enhancement, business expansion, and growth among many other things.
However, these plans may not be achieved or realized without the necessary support from the government, individuals, regulatory agencies, international organizations, other countries, etc.
Below are three major ways highlighted by sector players and economic experts, through which Nigerian manufacturers can scale in the New Year with help from stakeholders at different levels.
Increased credit access: Manufacturers need access to credit in order to boost their business and also increase productivity, however over the years this has remained a recurring challenge. In addition to this, available loans are given at double-digit with conditions that are exorbitant and almost impossible to meet.
“The problem is that credit schemes are being processed like normal loans using the same requirements, banks ask for at least 10 to 12 different documents and a lot of other things that are not easy to get, which eventually will not guaranty getting credited because the banks will continue asking for other documents till you get frustrated,” Micheal Ola Adebayo, director at Haffar Industrial Company Limited, told BusinessDay.
Experts say when enough credit is pumped into the sector, it will be productive and will make a significant impact on the economy.
“In order to assuage the high-cost manufacturing environment and improve the competitiveness of Nigerian manufactured products, funding at liberal lending rate (single digit) is critical,” Segun Ajayi-Kadir, director-general of MAN said.
Consequently, the government through its financial agencies and banks needs to support local manufacturers.
Improved infrastructure: The government at all levels needs to critically address the issue of poor infrastructure which has adverse impact on the competitiveness and productivity of manufacturers in Nigeria.
This becomes even more critical as manufacturers in Nigeria are yet to measure up with their counterparts in other African countries and hence cannot effectively and efficiently participate in the ongoing African Continental Free Trade Area (AfCFTA).
A report by the Manufacturers Association of Nigeria (MAN) affirmed that the country’s infrastructure has not been able to spur the desired economic growth through enhanced real sector productivity.
MAN notes that this is caused by the low budgetary allocation for provision of infrastructure and the absence of monitoring and evaluation mechanisms to interrogate the implementation of the budget and relevant Executive Orders.
Nigeria requires $15bn (N6.19 trillion at N413 to a dollar) worth of investments annually for 15 years in order to adequately develop its infrastructure according to reports from the Financial Derivatives Company, an economic and financial research firm.
However, the possibility of fulfilling that is quite slim considering the allocated budget for infrastructure in the country, coupled with the dwindling rate of foreign investment into the country.
MAN advises that budgetary allocations for infrastructure be prioritized and properly monitored for implementation.
Increased patronage: Despite being exposed to a market with a population of over 200 million people, the Nigerian manufacturing sector is yet to reap the benefit of a large market as players in the industry are faced with high cost of production and a harsh operating environment, but also the high appetite by Nigerians for foreign-made products.
Manufacturers say that patronage of locally produced items have remained unimpressive as it struggles to compete with foreign made items despite the energy and cost utilized, this discourages sector players as they believe that locally made products serve consumers better as durability, affordability, adaptability factors are considered during production.
Vincent Nwani, investment and business consultant, told 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.