The Manufacturers Association of Nigeria (MAN) is doing everything it can to organise a summit at which the Nigerian government will be represented by its most senior ministers in order to address the future of the country’s manufacturing industry.
This position was made public by Otunba Francis Meshioye, President of the Manufacturers Association of Nigeria, during his talk at the Adeola Odutola Lecture for the 51st Annual General Meeting of the Association, which took place on Thursday, October 19, 2023, at the Oriental Hotel on Victoria Island in Lagos. The meeting was hosted in Nigeria.
Meshioye disclosed that the economy, and in particular the manufacturing sector, has been the worst hit by the combination of external and domestic challenges. He added that beginning in 2015/2016, the Nigerian economy expressed a recession that was triggered by the global financial crisis that was due to the sharp decline in the oil market. Meshioye disclosed that the economy, and in particular the manufacturing sector, has been the worst hit by the combination of external and domestic challenges.
He went on to say that just as the country was recovering from the recession, a worldwide health pandemic appeared, which disrupted economic activity and global supply chains, and posed a huge threat to industry. He said this occurred just as the nation began recovering from the recession.
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MAN’s Presidential Comments
MAN, President said “Your Excellency, our Association has taken due notice of your policy pronouncements, particularly within your first 100 days in office. Some bold policy actions, including the removal of fuel subsidy and introduction of managed float of the exchange rate, have elicited the commendation of most economic actors and stakeholders.
“The fallout of those measures has equally thrown up some policy imperatives that should be addressed in order for the economy to rebound and for the citizenry to appreciate and reap the long-term benefits of the various reform measures.
“In addition, we seek your intervention to facilitate an engagement between the Central Bank of Nigeria and MAN to discuss the recent lifting of the restriction on access to foreign exchange on 43 items. We are confident that the outcomes of conversation will allow the CBN to achieve its objective of reducing pressure on the parallel market and effective control of the foreign exchange administration. At the same time, it will ensure that domestic production is not overrun
by an influx of imported alternatives and our raw materials that are not locally available could be procured using the official market.”
He recalled that ever since it was founded, MAN has been at the forefront of promoting and advancing the industrial development of our nation. He emphasised that over the course of its journey, our Association has engaged in impactful collaborations and continuous engagements with the government of Nigeria and other relevant stakeholders, both inside and outside of the country. He said that this was one of the reasons why MAN has been so successful in its mission.
According to him, MAN has constantly given a platform for manufacturers to join together to share their expertise and resources in order to expand the frontier of our economic development and foster a cross-border value chain in order to achieve sustainable economic growth and development. MAN’s goals are to expand the frontier of our economic development, increase the frontier of our economic development, and foster a cross-border value chain.
He emphasised that the reason why the topic of this year’s Annual General Meeting is “Setting the Agenda for Competitive Manufacturing under the AfCFTA: What Nigeria Needs to Do” is because of the manufacturing sector’s consistently poor performance over the course of the past several years.
At the same time, he said “we are looking at the promising growth trajectory and development opportunities that are embedded in the African Continental Free Trade Agreement (AfCFTA) for the Nigerian manufacturing sector.
“It has become a matter of necessity and urgency to deepen our awareness of the imperative of the AfCFTA; we need to develop the right strategies and concerted efforts to position our economy as the number one manufacturing hub of the African economy.”
He asserted that evidences from numerous regions of the world, including China, the United States, Japan, Germany, and South Korea, have proved the importance of the manufacturing sector in developing a resilient economy. These countries include South Korea, Japan, Germany, and the United States.
In his words: “As an example, in 2021, average manufacturing output accounted for as high as 35% of Ireland’s GDP growth; 27.44% in the case of China, and 48% of Puerto Rico’s economy. In the United States, it accounted for more than 60% of the total exports and about 35% of the US economy’s total productivity growth. In Nigeria, the contribution of the manufacturing sector to the total output is not higher than 10%, with an average growth rate of approximately 2.3% over the last five quarters. Manufacturing sector development is key to industrialization. Sadly, the growth of industrialization in Nigeria remains at a very low ebb.”
His examples included the African Development Bank’s (AFDB) industrialization index, which showed that Nigeria has a long way to go, and the UNIDO’s industrial competitive performance index, which also showed that Nigeria’s industrial sector is not very competitive.
He said that there is no better time than now to deal with the problem of this important sector’s lack of competitiveness and poor performance.
He then talked about some of the problems that are worrying people and hurting the performance of the production sector.
Speaking on Multiple Taxation he said “An average member of MAN is subjected to no less than 30 different forms of taxes, fees, and levies. The consequences of the incidence of multiple taxation are immense and include the rising cost-of-doing business and rapid divestment in the manufacturing sector. These issues combine to depress demand; worsen job losses and increase the incidence of poverty and low revenue generation from the sector.
“We are confident that the Presidential Committee on Fiscal Policy and Tax Reform will adequately address the matter. Our Director General represents the Organized Private Sector on the Committee and we look forward to working jointly with the representatives of your Ministry on the Committee to make the case for fair taxation of the manufacturing sector.
On high cost of borrowing, MAN president said “Another constraining factor in the manufacturing sector is the challenge of high interest rate. The average bank lending rate for manufacturers is 26% per annum. We acknowledge the 9% interest rate on the N75 billion loan facility for a minimum of 75 companies that was recently promised by Mr. President.
“While commending His Excellency for this initiative, we are hopeful that it could even come at a lower rate and MAN would be given the opportunity to work with government to determine deserving sectors, agree the disbursement modalities and join in the evaluation and monitoring of its effectiveness.
“We believe that this inclusive approach will guarantee more success and create the basis for granting a much bigger emergency fund for the beleaguered manufacturing sector in the near future.”
On infrastructural inadequacy, he noted that “Poor infrastructure, including inadequate power supply, poor road networks, and inefficient port facilities are serious impediments to the growth of the manufacturing sector. We look forward to government to improve investment and undertake effective reforms to guarantee reliable power supply; good road networks; and an efficient port system.”
He was upset that there wasn’t more local content development and buying of goods made in Nigeria.
“Nigeria has a low local content adoption and patronage of made in Nigeria products. We urge His Excellency to ensure effective enforcement of local content and patronage regulations. This can be achieved by strict enforcement of local content laws, incentivizing local sourcing of raw materials, and innovation in the manufacturing sector. Also, the public sector at all levels should, as a matter of national importance, step up their compliance with existing government directive on patronage of made-in-Nigeria products, including Executive Orders 003 and 005.”
On poor sectoral integration of the manufacturing sector, he stated that “the manufacturing sector is one of the sectors of the economy with wide sectoral interlinkages. However, the low level of development of auxiliary sectors is disentangling the manufacturing sector from the rest of the sectors. This is more so in agriculture, iron and steel and mining sectors. This has resulted in a limited supply of raw materials and other input for the manufacturing sector. Therefore, it is essential to encourage backward integration and sectoral linkages to promote a more sustainable manufacturing sector in Nigeria.”
On shortage of foreign exchange, he declared that “MAN appreciates the new administration’s policy on exchange rate unification as part of the measures to address the forex crisis. However, the problem is only half solved as forex shortages and high rate persist in the market. Addressing supply inadequacy is critical to a resilient manufacturing sector and we urge government to intensify its current efforts in this regard.”
He made it sound like the sector is about to enter a new and important era. He also said that the manufacturing sector is going through tough times, but that making a detailed plan for its change will make it more competitive and help it reach its full potential.
He promised that MAN would always be a key partner to the government and would be willing, available, and ready to help the government formulate and carry out its policies.
Dignitaries at the event
He announced that Olusegun Olutoyin Aganga, CON, would be there. Aganga is a famous Nigerian who was a master accountant, an accomplished international transformational economist, and a former two-time Minister of the Federal Republic of Nigeria. He was also the founder of the Nigeria Leadership Initiative and the Aspen Global Leadership Network, and he gave an amazing speech at the 3rd Adeola Odutola Lecture.
Some of the important people who attended the event were Mr. Rabiu Olowo, who is a representative for President Bola Tinubu, and His Excellency, Otunba Niyi Adebayo, who was the former governor of Ekiti State and minister of industry, trade, and investment. Other important people included International Development Partners, members of the Diplomatic Corps, directors and heads of Ministries, Departments, and Agencies of the Federal Republic of Nigeria, members of the Organised Private Sector of Nigeria, and members of the Bus.
The book launch for “Turning the Wheel: A Story of the Manufacturers Association of Nigeria” was the event’s high point.
