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Stakeholders foresee bright future for industry, trade in Nigeria

By on January 26, 2015

Even in the present thick cloud of politics, stakeholders in the industrial sector maintain that the Nigerian trade and industrial environment has never been this good, Festus Akanbi reports

On Tuesday, the Federal Government approved a new funding mechanism that would give cotton, textile and garment companies in Nigeria access to long-term, low interest loans to finance their operations.

This, the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, said was part of the new National Cotton, Textile and Garment Policy aimed at revitalising and boosting the growth and development of the industry.

The policy, a product of prolonged and comprehensive consultation with all the stakeholders in the industry, is expected to address all bottlenecks inhibiting the growth and development of the cotton, textile and garment sector.
According to industry stakeholders, it will also improve the quality, quantity, production capacity, marketing and competitiveness of players across the entire value chain; control the influx of fake and sub-standard textile and garments into Nigeria; and improve the competitiveness of CTG across the nation, among others.

According to information gathered from the ministry, the policy is expected to lead to: a rise in direct employment from 24,000 currently to 50,000 by 2015 and 100,000 by 2017; an estimated increase in indirect employment from 650,000 presently to 1,000,000 by the end of 2015, and 1,300,000 by 2017; attraction of $1.5 billion FDI into the sector in the next five years; and increase in seed cotton production from 180,000 MT in 2013 to 500,000 in 2017.

The nation will also be able to save up to $2bn in foreign exchange and increase export earnings to $3bn or 0.5 per cent of the global share of international trade in textiles and garments in five years.

Already, a number of the beneficiaries of the CTG Fund have had their loan tenor elongated while their interest rates have been reviewed downwards. This, experts have said, will go a long way in alleviating the burden on CTG companies, especially those in the northern part of the country.

Industry Players Excited
However, this is not just about another government policy, industry players are excited because this is the first time in the history of the country that government will be putting in place a comprehensive policy that cuts across the entire value chain, from farm to fashion.

Key stakeholders in the CTG industry have also commended the Goodluck Jonathan administration for putting in place sound policies. To them, the Nigerian textile industry is on the verge of returning to the good old days.

The President, Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, described the new CTG Policy as “the requisite compass” for revitalisation and growth of the cotton, textile and garment industry in Nigeria, adding that MAN would do everything to support the implementation of the policy.

He said, “MAN was involved in the entire process of the CTG Policy. For us, the CTG policy is another milestone towards Nigeria’s Industrial Revolution because it shows a clear and integrated approach towards a complete revitalisation and growth of the industry across the entire value chain.

“The CTG Policy is the requisite compass for navigating the sector back to competitiveness, growth and job creation.”

The Vice President, Nigeria Labour Congress and Secretary General, National Union of Textile, Garment and Tailoring Workers, Comrade Issa Aremu, said the new CTG Policy, if well implemented, would return the sector to “the good old days”.

“Today is a great day for us. We want to thank the Federal Government for coming up with this policy. With the new CTG Policy, we believe that very soon, the good old days will be back in the cotton, textile and garment industry,” Aremu said.

The Chairman, Nigeria Textile Manufacturers Association, Senator Walid Jibrin, recalls happenings in the industry for four decades and declares, “In over 40 years of working in the textile industry, this is the first time we are having a truly realistic and comprehensive policy for the sector.”

The interesting twist to the story, however, is that experts have said that the euphoria in the CTG sector at the moment is about the same across all key industrial sectors, adding that the nation needs consistent implementation of policies, which are currently yielding good results to achieve the desired sustainable and inclusive growth.

An economic consultant, Dr. Tayo Aderele, said his analyses of industrialisation in Nigeria showed that little had been done before this administration to put Nigeria on the path of success like the industrialised countries of the world, which even had no resources like Nigeria.

According to him, despite its lack of domestic energy resources, South Korea has some of the largest and most advanced oil refineries in the world.

“We, as a country, have been sleeping for so long. Thank God we are at least starting somewhere and seeing modest results. All we need is consistency,” he noted.

Aderele noted that before the current administration, there were no strategic plans to ensure sustainable economic and revenue diversification.

“There were just pockets of plans that were not coordinated across all sectors of the Nigerian economy. The result, of course, was industrial anarchy. Now, that there is a clear and well developed plan to industrialisation, (the Nigeria Industrial Revolution Plan), all we need is dedicated implementation to realise our industrialisation goals,” he said.

A document obtained from the Ministry of Industry, Trade and Investment, revealed that prior to 2011, there was no industrial plan for Nigeria; no economic and revenue diversification strategy; low manufacturing contribution to Gross Domestic Product; low level of value chain development in different sectors; weak industrial infrastructure; and complete dependence on importation and exportation of only raw materials.

Industrial Revolution Plan
The current administration developed, “for the first time in the history of the country, a comprehensive, integrated and strategic roadmap to Nigeria’s industrialisation – the Nigeria Industrial Revolution Plan (NIRP).”

Though the President formally launched the revolutionary plan in February 2014, its implementation, which had been yielding good results, began in 2012, the ministry said.

The fundamental goal of the NIRP is economic and revenue diversification. The plan focuses on the sectors where Nigeria has comparative and competitive advantage and has been endorsed by private and public sector stakeholders as a game changer in the advancement of industrialisation in Nigeria.

In 2013, it was reported that the United Nations Industrial Development Organisation (UNIDO) endorsed the NIRP and, for the first time, adopted Nigeria as one of the two countries in Africa it would work with for the realisation of Africa’s industrialisation goals. This, experts, said had never happened in the industrial environment of Nigeria.

The NIRP focuses on the supporting structures and enablers, which are vital for Nigeria’s industrialisation. They are: infrastructure, skills development, finance, investment climate innovation and technology, standards and local patronage.
The NIRP is expected to lead to a 10 per cent increase in manufacturing’s contribution to GDP in the next five years.

Another expert in development economics, Dr. Abel Chukwuka told Thisday on Friday that “though I don’t want to get myself involved in the current politics, I think it is wise to acknowledge when something is being done right.

“I would tell you that industry, trade and investment is not the same in Nigeria. Things are looking up. So, someone, some group or some government must be doing something right. It is just unfortunate that the oil scene is threatening to drag the country back,” he pointed out.

Based on Chukwuka’s assertion, it is pertinent to dwell more on some specific sectorial policies that are yielding good fruits under the current administration, such as the Nigeria Automotive Industry Development Policy and the National Sugar Master Plan.

Automotive sector
Before the development of the NAIDP, Nigeria and Bangladesh were the only two nations in the top 10 by population without a developed automotive industry.
The Director-General, National Automotive Council, Engr. Aminu Jalal, had said, during a recent press briefing, that prior to the development of the policy, Nigeria spent $6 billion annually importing cars.

He said, “From 2012, the Ministry began a robust analysis of automotive sectors globally and began working with international investors and local stakeholders to develop a holistic and robust automotive policy, which the President approved in October 2013.

“Since the launch of the policy, the number of auto manufacturers in Nigeria has increased from four to 22; 10 car manufacturers have started producing and some have even expanded existing low level production as follows: (Nissan (new), Peugeot (expansion), Hyundai (new), Ashok Leyland (new), Innoson Vehicle Manufacturing (expansion), Shacman (new), Shineray (new), Foton (new) and Sinotruk (new).”

Three companies (Kia, Renault and Joylong), he said, were currently constructing their assembly/manufacturing sites, while nine others (Toyota, Honda, Isuzu, Tata, Skoda, MAN, Mitsubishi, Ford and Volkswagen) were in their final stages of pre-investment due diligence.

Innoson, according to the DG, has also produced affordable cars with 45 per cent local content.

Achievements in the automotive sector
THISDAY checks revealed that, due to consistent implementation of revival measures in the automotive sector, investments in the sector have risen from $62 million over 10 years (between 2001 and 2011) to $150 million in 2014 alone, with a pipeline investment of $300 million expected by 2016.

The number of automobile test laboratories has also increased from zero to three, while the automobile manufacturing capacity utilisation, which stood at 10 per cent between 2001 and 2011, has risen astronomically to 50.3 per cent as at the first half of 2014.

Sugar Sector
Stakeholders in the sugar sector attested to the fact that, previously, there was no policy or strategy for the development of the sugar sector, with only 3,850 jobs created in the entire sugar industry before 2012.

According to the Executive Secretary, National Sugar Development Council, Dr. Abdul Latif Busari, before 2012, investment in the sugar industry was less than $100 million.

“There were no sugar research and development facilities, while Nigeria imported 97 per cent of the sugar consumed in the country. This and many other challenges in the sector led to the rethink, which gave birth to the development and launch of the NSMP in September 2012,” he said.

The NSMP, according to Busari, has led to the creation of 11,492 jobs currently, which is expected to increase to 180,000 jobs by 2016.

It was gathered that investment pipeline for the sugar industry has increased to $3.2 billion currently; the price of sugar (Naira/50kg) has fallen from N10,370 to N7,003; while sugar plantations and refineries are being developed in every region of the country, especially the more vulnerable regions of the North (Sokoto, Kebbi, Jigawa, Taraba and Adamawa).

Cement Sector
Experts in the cement sector corroborated Government’s position that Nigeria’s installed cement production capacity was 16.5 mtpa (million tons per annum) as at 2011; the sector attracted $9 billion investment and imported 5.2 million tons annually.

Currently, the cement sector has become one of the biggest industries in the Nigerian economy, due to the consistent and successful implementation of the backward integration policy.

Many stakeholders, who were interviewed, said the current administration had ensured capacity growth in the sector and had provided the right environment for more investments into the sector.

THISDAY investigations reveal that installed production capacity has increased by 139 per cent, from 16.5 mtpa to 39.5 mtpa. There has also been an increase in investments in the sector by 150 per cent to over $15 billion in 2014; while the sector now supports about 1.6 million jobs.

For the first time in the history of the country, Nigeria no longer issues import licences and has become a net exporter of cement. Government has also regulated the grades and prescribed uses of cement. This is aimed at reducing the risk of building collapse and accidents in the future.

Way Forward
In all, the Manufacturing Association of Nigeria has said that, owing to the implementation of sector-friendly policies, under the NIRP, Nigeria’s total manufacturing capacity utilisation has increased from 46 per cent in 2010 to 52 currently.

“As against 2011, when manufacturing contributed 7.12 per cent to GDP, manufacturing is currently growing at 21.58 per cent, year on year (Q3 2014).  Manufacturing activities, such as non-metallic products, chemicals and pharmaceutical manufacturing, are growing at 44.43 per cent and 44.22 per cent respectively.”

Analysing the trend in the industry, trade and investment environment, therefore, industry watchers have asked for sustained implementation of the current policies to move the nation’s economy to the desired height.

 

[ThisDay]