Guardian

THE last one year has seen Nigeria’s economic rating move in the upward direction with forecasts from various rating agencies and developed economies showing that if the country’s economy maintains its current stride, it will no longer be an “emerging economy” by 2030. For this transformation to become a reality, experts have said  that strategic policy choices have to be made and maintained.

Despite its slow-paced growth, the nation’s real sector had its fair share of gains and pains in 2012, especially in the areas of backward integration of certain products, trade liberalisation, incentives for growing industries, policy inconsistencies, poor funding among others.

Nigeria’s manufacturing and industrial sector is yet to find a lasting solution to its various structural problems, resulting in a slow growth rate in terms of output and exports, low level of investment, high concentration of manufacturing industries in certain areas, resulting to uneven development, allocative technical inefficiencies, poor quality of products, and low level of research and development activities which are necessary to be put on positive directions for successful implementation of the country’s transformation plan.

An ideal transformation agenda among other things, seeks to transform the economy from one characterised by low saving-investment ratio, low growth, high interest rates and taxes, low productivity and low technology into an economy of high saving-cum-investment, high technology-cum-productivity and high sustainable growth rates.

As the 2013 financial year kicks off, there are moves to salvage the remaining part of local industries and aid the development of emerging industries, as the Minister of Trade and Investment, Olusegun Aganga, expressed the ministry’s commitment to build on government’s transformation agenda to aid industrial growth and development.

However, industry watchers believe that 2013 may offer a ray of hope for the real sector, if government’s commitment to industrial growth would aid the revival of moribund and near comatose industries such that decent jobs that would address the problem of unemployment and poverty are created in sufficient quantities.

Already, investors and retail chains both foreign and local, lured by the  nation’s clear potential – a large population, positive macro-economic growth and a strong appetite for consumer goods are dramatically expanding their domestic retail footprint in the country.

The Minister, while speaking at the yearly seminar for journalists themed: ‘Leveraging Nigeria’s modest gains for enhanced growth’ in Abuja, recently, noted that with about 20 per cent of the Foreign Direct Investment in Africa for 2012 invested in Nigeria, there is a need for the country to play up areas of competitive and comparative advantage to stimulate growth in the real sector.

Specifically, Aganga noted that the agencies under the ministry are developing initiatives to enhance government’s industrialisation moves, as well as flow of investment in the country.

According to him, the government, through the ministry, had put in place strategies to restructure areas of critical needs and losses in the economy.

Respite for MSMEs?

The Chief Executive Officer of the Bank of Industry (BoI), Evelyn Oputu said the bank has developed a new model to enhance Micro, Small and Medium Enterprises (MSMEs’ access to finance in order to aid their start-up and productivity.

According to her, the bank has clustered the SMEs in a form of industrial pack to enable them negotiate better for funding and access to raw materials, rather than working through the grid.

She explained that many SMEs have not been able to overcome certain challenges due to their inability to collectively bargain and negotiate for basic infrastructure and adequate financing for the businesses.

“To reduce the cost of doing businesses by many SMEs, the bank has decided to address key challenges encountered by the businesses through a cluster approach by setting up industrial/cluster parks with all necessary amenities in order to address the issue of infrastructure, high legal documentation registration fees among others.

“The cluster approach shall examine the possibility of setting up small renewable energy power plants of 1-5MW capacity or more to serve the clusters and the immediate community. This approach would aid financing to firms while creating an environment conducive for businesses to thrive”, she explained.

New elixir for the textile industry?

For the textile sector, stakeholders in the sector have called on the federal government to make available to the sector an intervention fund of about N1 trillion, as well as a longer tenor period in order to aid the growth and development of the sector.

Precisely, the stakeholders cited government’s intervention in the banking sector through the Asset Management Corporation of Nigeria (AMCON) as an example, therefore canvassing for an increase in funds allocated for the growth of the sector.

With the Bank of Industry (BoI) disbursing about N60 billion of the N100 billion intervention fund to the sector in the last two years, members of the Nigerian Cotton, Textile and Garment sector are seeking a new line of credit for the industry.

BoI boss, Ms Evelyn Oputu, said there is a need for a line of credit to resuscitate companies in the textile industry, as it remains a key sector that generates a high number of jobs in the country.

She noted that the bank and other agencies are doing a mid-term evaluation of the Cotton, Textile and Garment Scheme in a bid to examine the progress made and other areas of concern.

According to her, BoI has disbursed nearly 60 per cent of the N100 billion allotted to the textile sector to revive it, but hopes to increase funding to the sector if empowered.

The Country Representative,  United Nations Industrial Development Organisation (UNIDO), Patrick Kormawa advocated the need for an improved investment climate, effective policies for the real sector, as well as enhanced capacity building for members of the industry in order to aid the growth of the sector.

He identified the dearth of adequate machinery and manpower as a bane to the growth of the real sector, therefore calling for a renewed effort to revitalise the sector.

The General Secretary, National Union of Textile, Garment and Tailoring Workers (NUTGTW), Isa Aremu commended the government for the intervention effort in the textile sector, noting that though it came late, it was better as many firms were revived.

He said: “When the textile industry was still vibrant, a single firm could generate about 10,000 jobs. However, due to the intervention fund, we have been able to revive some firms. There is a need for an accelerated growth in the sector and this can be achieved through increased funding to the sector.

“Presently, 58 companies are managing N100 billion, while AMCON has spent about N5.6 trillion on rescued banks. This gesture can also be replicated in the real sector if the desired growth and employment generation will be achieved.”

He then urged the BoI to increase the tenor rate for loans sought by firms in the real sector in order to aid attractiveness of the loans to the companies and foster development.

“A drop in interest rates for the real sector will foster its growth. I believe we can work towards a zero per cent interest rate if we set our mind towards it”, he added.

Protecting cement, sugar industries.

To protect local cement and sugar industries, Aganga stated that plans have been concluded to reduce the exportation of raw materials and increase the net exportation of processed goods this year in order to drive the nation’s economic growth and industrial revolution plan.

To this end, the federal government announced that packaged sugar (finished cube and granulated) importation into the country will officially become prohibited from January 2013, under a new sugar policy intended to replicate the successes achieved with the Backward Integration Policy in the cement industry.

For the cement industry, the ministry noted that with the glut currently being experienced in the sector, plans are underway to begin the exportation of cement.

Specifically, the importation of raw sugar, which is the basic raw material for refined sugar, will soon stop being an all-comers’ affair under a reviewed importation policy to be introduced in the sector soon.

According to the new policy, a full era of backward integration will soon begin, which will tie importation of brown raw sugar by producers and manufacturers in the country to the quantum of their local productive capacity in sugarcane cultivation and development, either as fresh growers or outgrowers.

Hinging industrial growth on capacity building

To achieve the ministry’s industrialisation rebirth as well as the development of Small and Medium Enterprises, the Industrial Training Fund (ITF) and the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) have hinged the attainment of the set objectives on appropriate capacity building for the nation’s workforce and skill acquisition exercise for youths.

Despite the dearth of funds for the agencies, the ITF noted that commitment to manpower training and skills development would create an enabling environment for investments and industrial growth.

United Nations Industrial Development Organization (UNIDO) representative and Director, regional office in Nigeria, Dr. Patrick  Kormawa, while emphasising the need for effective industrialisation, said: “no country has become rich and moved a huge number of its citizens out of poverty by exporting raw materials and foodstuffs alone without having a modern industrial sector supported by a vibrant service. Of course this means shifting from trading commodities to higher value products. It means a refocusing on manufacturing and on natural resources.

“Above all, it means looking objectively at the concept and aims of international development cooperation – and taking the route of wealth creation to reduce poverty. Anything else, is a “missionary approach to poverty reduction”, which has kept about half the Nigerian population poor, despite decades’ long interventions. Manufacturing is undoubtedly the principal propellant in transforming human and natural resources.”