Over the years, Nigeria’s industrial strategy has been obfuscating as it is difficult to determine whether the country is trending towards import- substitution or export- orientation.
Import-substitution is a strategy in which local industries are established with a view to producing goods that replace imported ones.
Export- oriented or substitution industrialisation, on the other hand, is a strategy of exporting goods for which a country has a comparative advantage. This strategy has worked miracles for the Asian Tigers.
Nigeria has adopted what is called ‘resource-based industrialisation’, whereby firms use locally available resources, such as raw materials, man power and natural resources, to grow domestic production.
This has seen some success with local input sourcing reaching 57 percent in the first half of 2018, according to the Manufacturers Association of Nigeria (MAN). Despite adopting this strategy, local manufacturers remain the heaviest importers of inputs, machines and packaging materials. This is why any scarcity of dollars hurts the industrial sector most.
Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), pointed out recently that the country needs a new industrial strategy targeted at shoring up non-oil export.
He, however, explained that import- substitution and export promotion could go together, adding that resource-based industrial is more competitive because local resources are utilised, citing an example with the bright performance of food and beverage sub-sector which gets most of its inputs locally as a case study.
Nevertheless, facts on ground show that the country’s industrial strategy is not clear.
In 2013, for instance, the National Automotive Policy imposed 35 percent levy and 35 percent duty on imported vehicles, amounting to a total of 70 percent. This was meant to protect local vehicle assemblers.
At the same time, importers of damaged or ‘accidented’ vehicles officially enjoy a rebate of 30 percent. What this has done is to encourage the importation of rickety vehicles, which make up 70 percent of imported cars today.
“If you want to develop a market for 54 companies that have got licenses with 410,000 capacity plants and you import a huge number of used vehicles, how are you going to support vehicles being assembled, since the ones assembled locally will be more expensive?” Bambo Adebowale, chairman, Auto and Allied Sector group of the LCCI, asked in a recent interview with BusinessDay.
Speaking at last year’s Manufacturing & Equipment Expo organised by MAN and Clarion Event West Africa, Aliyu Suleiman of the Dangote Group, said that an industrial strategy has become important for Nigeria as new governments spend half of their tenures devising plans, with little room for implementation.
“Last year, the United Kingdom produced a revised manufacturing strategy— a definitive roadmap. We can do that in Nigeria and MAN is in the best position to do this,” he stated.
According to him, the industrial strategy should include the aspiration of industry in terms of how much GDP contribution targeted; where to play, with regard to areas of priority, and how to win, in terms of becoming competitive.
ODINAKA ANUDU
