Revitalising the manufacturing sector

Manufacturing and related productive sectors require all the reinvigoration the authorities can muster to stem the protracted decline in output and firm up recovery efforts. Nigerians are bothered about the country's almost total dependence on imports, ranging from heavy machinery/equipment, chemicals and fuel to food, with the associated massive outflow of capital. It is doubtful, however, if the remedial measures recently unfolded by government can assuage their worries. 
At a press briefing in Abuja on December 22, the Minister of State for Commerce and Industry, Mr. Humphrey Abah, announced that the Federal Government had started "the process of retooling and revitalising the textile sub-sector," as part of a blueprint for the entire productive sector. According to him, "The sum of N100bn has been advanced to the Bank of Industry to be disbursed to applicants in need from the textile sector."

Also at the event, the Minister of Commerce and Industry, Chief Achike Udenwa, disclosed that importation of machinery, equipment and spare parts for cement plant building would be duty-free for a period of two to three years, while import duty on gypsum would remain within five per cent and below until local production on a commercial basis has been achieved. Importation of Low Pour Fuel Oil would also be duty-free.

The strategies thus unfolded are remarkable but unlikely to yield meaningful results. This is so because underlying factors in Nigeria's loss of productive capacity have been largely overlooked, while there is apparent confusion over policy objectives in some other areas. The textile industry, for instance, cannot be revived by mere infusion of funds to aid operators, when the local market for its products is perennially flooded with cheap, low quality fabrics and wears from China and elsewhere. Besides, major raw materials and input like cotton and yarn can only be obtained at exorbitant cost from abroad.  Nothing in the ??stimulus package?? released by the Ministers addresses such economically crippling factors as dumping, smuggling, gridlock at seaports and associated delays and costs, endemic corruption, acute electricity shortages, poor transportation system, policy inconsistencies of government and insecurity. These issues demand a lot more rigorous analysis and strategic planning than the authorities have displayed thus far. 

Again, the decision to grant duty-free importation of LPFO betrays the absence of collaboration and coordination among key agencies of government. LPFO, which could be sourced from our local refineries, is vital to production operations in industry and should be within easy reach of manufacturing firms. But the Nigerian National Petroleum Corporation, apparently with the approval of the Ministry of Petroleum Resources, chose to make it unaffordable by raising the price from N25.40 to N48 per litre, last May, and then up to N57 per litre in June. 

Similar increases had been effected at about the same time in the price of gas by a private firm that is dependent on the Nigerian Gas Company, a subsidiary of the NNPC. LPFO, gas and diesel are indispensable to manufacturing firms under the present circumstances in the country when grid electricity is unavailable on a sustainable basis. 

Therefore, inasmuch as it is to be appreciated that the government is concerned enough to make the importation of LPFO duty-free, a holistic approach targeting energy sufficiency and affordability remains the preferred option for revitalisation of industry. At all times it should be borne in mind that local sourcing of raw materials and other industrial input is a matter of strategic importance.  It must mobilise all resources at its disposal to combat the continued dumping of goods on the nation's market. Efforts should be made to boost the operational capability of the Nigeria Customs Service and other relevant agencies to curb smuggling. Industry operators and prospective investors alike are looking for standardised, stress-free procedures in their dealings with government agencies; they want consistency in policies. Manufacturing industries will gradually return to business as soon as the economy returns to the path of global competitiveness.