The Managing Director of Meiracopp Nigeria Limited; with extensive advisory experience in Energy, Finance, Business Strategy & Political Economy, Dr. Chijioke MAMA, in this interview with Prince Okafor, advised the Federal government on means to savage the nation’s industrialization to avert collapse of the sector.
Nigeria has several unrealized industrialization targets and several failed plans, what are the impacts?
What we are seeing in Nigeria is a regrettable derailment, from a previously promising trajectory, which was clearly headed towards Industrializations, but subsequently marred by hordes of challenges & limitations.
You can look at the impacts of the failed Industrialization objectives from two lenses. One lens looks at the opportunity costs of the failures we witnessed in the last four decades, which bring the industrialization crises into full perspective. These costs include; a vibrant automobile manufacturing hub that feeds West and Central Africa and supplies a reasonable portion of the circa 1.1 million units, annual automobile demand in Sub-Saharan Africa (SSA).
It also includes the lost promise of a refining/petrochemical manufacturing hub that meets the rising energy and chemical demand of the entire sub-Saharan Africa, through an optimized crude-to-chemical value chain. Self-sufficiency in wood production tied to a sizable export market. Vibrant ship construction and watercraft manufacturing sectors that meet the demands of the entire Gulf of Guinea and parts of Southern Africa.
This opportunity cost perspective, looks at the scale of the economic benefits that may have been realized if the industrialization trajectory stayed positive in the last 40 years; jobs, revenues, technology & skillsets etc. The impacts become more graphic when you juxtapose Nigeria’s manufacturing performance, with the manufacturing output of peer-countries such as Brazil, Indonesia and Turkey.
Is the crisis of Industrialization influencing citizens’ experiences in today’s Nigeria?
Nigeria’s failed Industrialization objectives have obviously affected her economic growth in adverse ways. Also very obvious is the consequent reduction in the general standard of living. What aren’t obvious; however, are the future implications.
I said earlier that you can view the industrialization crises with two possible lenses. The second lens involves forecasting the future impacts – especially social impacts of the crises – which is the potentially catastrophic consequences on a populous, ethnically diverse, predominantly illiterate and young demographic.
So if you choose to ignore the pains of today and rather match forward in time, into the period between 2030 & 2050, when Nigeria’s population is projected to near 400 million, then we will encounter a new reality. If there are no material changes in the present-day development indices; Nigeria may not be able to avoid the looming socio-economic crises, whose shadow is already being seen in the form of civil unrests, rising crime rates and ethnic tensions.
Are there more conspicuous indicators of the crises in the industrial and manufacturing sectors?
Of course there are many. You have several indicators! It is these obvious and regrettable indicators that make me say emphatically that; stimulating a manufacturing resurgence after the significant decline of the last 40 years is imperative and inevitable for Nigeria.
The manufacturing sector has a poor contribution to total labour force in Nigeria. This has to be improved. Inflow of capital into the manufacturing and industrial sectors has not recorded the desired growth. Between 1990 and 2015, India improved its global ranking on manufacturing output from 14th to 6th position. Nigeria’s own ranking has been on the decline.
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We must look beyond the economic benefits of industrialization such as jobs, tax revenue and forex earnings – which are nonetheless very important. Thus, Nigeria should critically consider the social costs of the failed quest to industrialize Nigeria; which evidently includes reduced standard of living and poverty-related civil unrests. Furthermore, manufacturing activities/ output in Nigeria is lop-sided, with three sub-sectors dominating output, namely FCMG, Construction materials and Chemicals.
What are the most important enablers and solutions for overcoming this industrialization crisis?
There are several enablers that vary in their relevance & impact. In my view three core enablers are: Unlocking Finance/Capital, Enabling Energy access and increasing the quality of our workforce. In my opinion, these are some of the critical barriers to a booming manufacturing sector in Nigeria’s specific context. Other important enablers include; reviving the very nascent process automation industry and catalyzing meaningful expansion of Physical & Digital Infrastructures that aid industries.
Furthermore, all primary & secondary enablers will require digital technologies for optimizing the potential and utility of production factors. As other nations kick start the 4th Industrial Revolution, we must enable the commensurate development of digital and technological capabilities that guarantee efficient production.
A focus on already established high growth sectors will help in accelerating progress, while mature and established products & commodities with detrimental levels of “import reliance” can receive specific policy & fiscal interventions. Government has already implemented a number of enablers, such as facilitating access to cheaper funds, access to forex as well as selective import bans which serve as incentives to some extent.
What are the strategies for accelerating our industrialization efforts?
There are several options. However, one important perspective is that Nigeria will not have the luxury of pursuing a slow-paced and predominantly long term Industrialization plan. The lowest hanging fruits must be secured and “quick wins” pursued, simultaneously with decade-long strategic plans. Why is this relevant? It’s relevant because population growth has outstripped GDP growth for many years in Nigeria, making any industrialization effort particularly exigent.
One quick win if you ask me, includes; unlocking the currently frozen and sub-optimal state of internal trade in Nigeria. In-country trade and structured commercial collaboration among Nigeria’s regions and states are severely constrained and that directly stifles the full realization of our market potential and thus may limit industrialization and manufacturing growth.
Relatedly, Nigeria should seriously consider the use of specific bilateral collaboration frameworks between Nigeria and other industrialized nations or countries with complementary capabilities; to drive the domestic growth of our industrial and manufacturing sectors. Take the bilateral partnership established in 2016 between Nigeria and Morocco for example.
In a short period, measurable and commendable progress has been made in specific areas, particularly the expansion of domestic Fertilizer blending capacity and potentially the establishment of the Nigeria-Morocco gas pipeline which will further enhance the aggressive gas sector development agenda of the Federal Government.
The Presidential Fertilizer Program (PFI) for example, involves a strategic collaboration with OCP of Morocco, which helped revitalize the dying fertilizer blending industry in Nigeria, through the strategic sourcing of phosphate component, as substitute for the import of NPK into the country. It may seem like a small win, but if there was a program that replicates this for textile, mobile phone, pharmaceutical, industrial chemicals etc. the gains will be very laudable and quick.
Has oil been a distraction in the quest for Industrialization & the aspiration to diversify the economy?
Industrialization is sector-agnostic, so you cannot say that oil has been a distraction to the Nigerian state. Even the hydrocarbon value chain is not fully realized in Nigeria.
Domestic crude refining capacity has been below expectation for years; petrochemical and other midstream proceeding capacities are subpar and the domestic production of oil and gas instruments and equipment is generally below average. There has been progress, but little progress in many areas.
If we have seen massive Industrialization or a very vibrant manufacturing capacity for the oil and gas sector, then one can insinuate that oil has been the distraction from scaling other sectors. Rather, what we have is poor industrialization indices across many sectors, including the oil and gas sector that has been the main source of revenue and foreign exchange for Nigeria.
Instead of being a distraction, our huge hydrocarbon resource endowment should be seen as the element that offers competitive advantages and which should provide a pull for the industrialization of other sectors.
For instance, if we provide reliable & adequate natural gas delivery infrastructures, such as pipeline systems to Nigeria’s major industrial hubs; namely, Onitsha-Nnewi Industrial hub, Lagos-Ogun Industrial Hub and Kano-Kaduna Industrial hub, we can catalyze massive growth by leveraging cost effective thermal power generation, heat generation & industrial boiling solutions.
This will also enable cheaper gas as feedstock for petrochemical processes, gas-derived urea fertilizer and other multi-nutrient fertilizers such as NPK. These could significantly raise agricultural output and also help Nigeria to accelerate the needed growth in food processing, as well as FCMG.
Vanguard News Nigeria
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