Engr. Mansur Ahmed is the current President of the Manufacturers Association of Nigeria. In this interview with NGOZI AMUCHE, he explains how manufacturers can contribute positively to the growth of the Nigerian economy at this point in time. Excerpts.
Given your wealth of experience and vast exposure in the manufacturing sector, what should member-companies look out for in your administration?
My vision is to increase the contribution of the manufacturing sector to the national economy. Today, as you are aware, the manufacturing sector is contributing less than nine per cent of the nation’s Gross Domestic Product, which is not good enough. In countries that are even less developed than Nigeria, we have seen higher rates of contribution by the manufacturing sector and, at any rate, for any country to be regarded as industrialised, the manufacturing sector, being the productive sector that produces the goods that generate value and wealth, must be contributing significantly to the growth of the economy.
For instance, in many of our peer countries; Malaysia, Indonesia, Brazil, South Africa, you see the manufacturing sector contributing something in the range of 30 per cent of their countries’ GDP. Here, we are contributing less than nine per cent. So, clearly, we have a long way to go to raise the level of contribution of the sector to the GDP. Part of the contribution comes from, not only the scope or depths of the sector, but also from the operational efficiency of the productivity, that is, the capacity utilisation. Consequently, we need to make sure that we eliminate those things that, on a day-to-day basis, tend to impede the operations of members and therefore reduce their capacity utilisation. Therefore, under my administration, members should expect expansion of the sectors, that is, bringing more manufacturers into the fold and ensuring that sectoral groups are made vibrant.
How many sectoral groups do you have?
We have about 10 sectoral groups, but if you look at their relative contributions, you will observe that not more than four or five sectoral groups are responsible for most of the contributions of the manufacturing sector to the economy and for most of the employment as well.
The textile sector used to be very vibrant, but it has declined significantly. So, we must broaden the sector to ensure that sectors that are not adequately functioning are restored to good health. In leather and footwear, there is tremendous capacity, but today, it is not being fully exploited, we are stopping at the production of wet leather. Value addition is the key to success in manufacturing, for instance, if you take the process, from hide to finished leather, and compare the value that is added from that finished leather to a pair of women’s handbags, the difference is huge. Hence, there is a need to deepen the sectors.
What policies do you consider paramount to pave the way for industrial growth?
First, we must consider what policies will make this vision feasible. When you are manufacturing, the first step is making an investment, so you want to look at the conditions that will make that investment worthwhile. The investment climate is key, and I think we have all known this over the years. This Government has been working on improving the business environment, as there have been several initiatives to improve the investment climate and thereby making investments and businesses easier for investors.
Second, you must also consider policies governing the development of infrastructure, because the more manufacturers depend on basic infrastructures such as electricity, water, transportation etc, the poorer the infrastructure, the higher the cost at which they can produce and deliver products to the market. So, building infrastructure is one of the most critical responsibilities of the Government for industries as a whole to be more competitive.
The third is improving the spending power of the ordinary people because the higher the spending power, the more demand for products. So, putting more money in the pockets of ordinary Nigerians clearly creates more market for the manufacturers. Policies that help improve the income of the ordinary person are very important.
The fourth is policy against trade malpractices. Such practices undermine the market and part of our major task is to ensure that Government continues to make laws and regulations that discourage these practices, particularly smuggling, counterfeiting, and dumping.
There is also the issue of finance. One major constraint of the manufacturing sector in Nigeria is the cost of financing, which is very high. For instance, if you borrow funds to invest at 20 per cent interest rate, you must make more than 20 per cent for that investment to yield benefit. In other countries, it is less than 10 per cent interest rate for investments. This means that you will have a problem competing with manufacturers from those countries. Cost of financing is very important and we must continue to work with Government to encourage the financial systems to continue to bring down cost of finance.
Manufacturers have constantly clamoured for a strong campaign against smuggling, counterfeiting, cloning and piracy, which bedevil their businesses, what strategies would you recommend to Government to curb the menace?
We are already engaging government on this; there are initiatives that have been started under President Buhari’s administration, which try to focus on taking necessary measures to discourage all these malpractices. I think that one thing is having the regulations and policies; the other is making sure that people who are engaging in these things are identified and dealt with according to the law. Therefore, the implementation of the regulation is important. We have been pushing and working with the key regulators that are involved in ending these malpractices such as the Customs Services, NAFDAC, SON, and will continue to work with all these regulatory agencies to ensure that the regulations put in place are effectively implemented.
The cost of funds and lack of long-term loans affect manufacturers, particularly the Small and Medium Scale Industries, how do you hope to address this yearning?
The Small and Medium scale Industries are very critical to the growth of the manufacturing sector because the more successful they are, the more the larger industries can rely on them to do a lot of the things that they themselves have to do. This way, the value chain will be stronger and will help both the larger and the smaller industries. We will continue to advocate for initiatives that will put more funds in the hands of the Small and Medium industries at lower cost or lower interest rate and on a longer-term basis because investment in manufacturing is on a long-term basis. So long-term funding is important. It is indeed lack of long-term funding that also tends to keep our industries small and at tertiary levels.
What is your take on the lingering subject of African Continental Free Trade Agreement?
Our position is that, ultimately, trade is good and that there are opportunities for manufacturers to grow if trading is expanded and made easier. However, in the context of the ‘Continental Free Trade Agreement,’ what we have said is that before you go into an agreement, you must access your capability to benefit from that expanded trade and your readiness to go into that kind of agreement. I think this is just the fairest thing to ask in any situation like this.
Once you know what the opportunities are and what the risks are, you will know what you need to do to mitigate the risks and to exploit the opportunities and this was what we said at the beginning of the conversation on the African Continental Free Trade Agreement. I think, to some extent, we were misunderstood by people who thought we were saying ‘No don’t sign’, but what we are saying is, first, understand what the agreement is going to mean in reality to your industry, to your economy, and so on and be prepared to mitigate the risks and to take advantage of the opportunities that arise.
How would you rate the current administration with respect to the manufacturing sector?
The manufacturing sector has been fragile for quite some time, so you really can’t blame this administration, which has just been in the power for four years. The overall economy has been affected by factors, which are way beyond this government. The crash of oil price in the international market has tremendously impacted negatively on the economy that its effect spread across every sector, particularly the manufacturing sector.
I believe that Government has tried to some extent to alleviate some of the pains we suffer, for instance, by creating special windows for manufacturers for FOREX, setting up of the Presidential Enabling Business Environment Council, and the Industrial Council to monitor what is happening to manufacturing as well as other sectors and recommend what needs to be done to ensure there is improvement.
How do you hope to promote a friendlier business environment for manufacturers?
Well, we need to ensure that policies are in place that will help to create a friendlier and conducive business environment. We need to work with the Government to ensure that continued investment in infrastructure is being made in order to reduce the cost of doing business and improve the productivity of the businesses themselves. We need to work with the Government to ensure that the overall business environment is being monitored in a way that we don’t fall back into recession. More concerted efforts are being made to strengthen agriculture so that we diversify the economy away
from oil.
