The national umbrella bodies of manufacturers – the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and Manufacturing Association of Nigeria (MAN) – have called on the Federal Government to incentivise raw materials to boost non-oil exports.
Speaking at an employment summit organised by the Nigeria Employers Consultative Association (NECA) in Abuja, which had ‘Trade and non-oil export: changing the narrative for rapid national development’, as a theme, the Director General of MAN, Segun Ajayi-Kadiri and his NACCIMA counterpart, Sola Obadimu, argued that the manufacturing sector is battling to survive under the heavy burden of multiple taxes, insecurity and international politics.
Ajayi-Kadiri declared that contributing a paltry of 7.3 per cent of the total exports of Nigeria, the non-oil sector is currently near its potential.
“I think there must be a deliberate move by the government to see manufacturing as a national interest matter. Some sectors must be deliberately incentivised so that Nigeria can have befitting and rewarding export. This calls for worry and it is an indication that a lot has to be done to promote non-oil export,” he stated.
He hinted that the abiding constraints to the performance of the sector have made it rather difficult to successfully export.
His words: “All it takes to export is not just to get the goods across the border, but to ensure that the goods are not left on the shelf when they get to foreign destinations. People have to buy them and the exporters can turn over. So, the challenges that are confronting our capacity to export are institutional, some are structural while some have to do with regulation.
“We also have infrastructure challenges that have made the manufacturing sector perform very low. Remember that the contribution of the manufacturing sector to the GDP has been hovering between nine to 11 per cent while capacity utilisation has been around 51 and 52 per cent. In that kind of situation, it means we operate in a high-cost environment. When we export, we are competing with products from different parts of the world.”
On why it is difficult for the Nigerian manufacturing sector to adhere to international standards for its products to be acceptable in the global community, Ajayi-Kadiri went on the defensive, saying: “I think there is a lot of misinformation on the claim that manufacturers do not adhere to standards. Every nation on this earth has its standard organisation.
It gives authenticity. It means that such a product has met the standard that has been set. So, if some people are exporting products that have not met standards, then you will need to question whether they are genuine manufacturers or if they have done their homework. Also, there is the fact that we operate in a global environment that is very competitive.
“Several countries use different methods to prevent or discourage or regulate exports into their countries. There are non-tariff barriers and many of them have to do with technical barriers that are deliberately put in place. Somebody gave an example of an individual that exported yam from Accra that was accepted. Then the same yam was exported from Nigeria and it was not accepted. The same yam. So, I think we have to be careful when determining that our manufactured exports are not accepted.”
He insisted that deliberately incentivising non-oil export is a national interest that must be driven by the national government to boost exports to strengthen its currency and enhance the quality of life of its citizens.
The MAN scribe lamented that the challenges confronting the manufacturing sector are not new and that they have been endemic for decades, warning that Nigeria is now facing an acute supply of raw materials as insecurity persists across the food-producing belt of the country.
On his part, the Director General of NACCIMA, Sola Obadimu, bemoaned the rising taxes which are responsible for the high mortality rate of businesses.
“In the desperation of government, it keeps on increasing taxes on members of the organized private sector, and that is where the problem is. You cannot keep on increasing taxes forever and worsens inflation because manufacturers cannot sell below their cost of production. If taxes are going up which is an input cost to industries, manufacturers will keep on increasing their prices. All of these are pushed to the consumers.”
Why successive governments had continually looked away from blocking leakages and reducing public spending to the barest minimum as a means of raising revenues baffles Obadimu.
“The cost of running government is so high. There are local government chairmen in this country that move around town with six cars in their convoy at this time when the cost of petrol is at an all-time high. There are also offices of First Ladies from the federal to the state level down to the local government councils. The cost of maintaining the high tastes of past governors and presidents who are no more in office is astronomical. The recurrent expenditure is very high.
I think our political players need to urgently address this area. They cannot continue to maintain the same high standard lifestyle while they expect the industries to continue to pay high taxes to maintain obnoxious lifestyles,” he submitted.
He also held that inflation in Nigeria will continue to spike until Nigerians reduce their appetite for foreign-made goods and services and produce more or face extinction adding that Nigeria must add value to its crude oil and other raw materials sourced locally.
While he lamented the inappropriate policies around cash that were taken earlier in the year hit some industries very hard, Obadimu identified standards and inability to compete on the global stage due to infrastructural and financial limitations as obstacles to business growth.
He explained: “Challenges facing non-oil products include standards. The ability to compete internationally on standards and price because of the high infrastructural costs that the industry goes through. Manufacturers that operate in countries where they do not have to worry about electricity, roads and other infrastructure can sell at lesser prices than those of us that have to provide our infrastructure at exorbitant costs.
He stressed the need for banks to be more open and transparent in supporting non-oil exporters adding that all the stakeholders must find a way around financial bottlenecks.