NACCIMA President, Herbert Ajayi
The Organised Private Sector (OPS), under the aegis of Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) has flayed the huge neglect suffered by the manufacturing sector in Nigeria.
The sector’s contribution is just four per cent of the Gross Domestic Product (GDP), which has resulted in jeopardised economic activities, as well as aggravated the nation’s level of unemployment.
According to NACCIMA, available information revealed that a total of over 800 manufacturing companies have closed shop between 2009 and 2011 as a result of their inability to continue to cope with the challenges posed by the harsh operating environment in Nigeria.
Besides, over half of the remaining operating firms have been classified as ailing, a situation that poses a great threat to the survival of manufacturing sector in the country in the years ahead.
NACCIMA President, Herbert Ajayi made these assertions while delivering a paper titled ‘Reviving manufacturing industries in Nigeria’ during the recent Revenue Mobilisation Allocation and Fiscal Commission Zonal Advocacy Workshop on Economic Diversification and Enhanced Revenue Generation held in Asaba, Delta state.
He noted that the manufacturing sector was still limping as it is “and this is because the country’s economy had depended on the petroleum sector since the 1970s.
“Specifically, between 2000 and 2011, over 800 manufacturing industries in Nigeria either shut down or temporarily halted production while capacity utilisation in industries has continued to hover around 30 per cent to 45 per cent on the average with 100 per cent overhead costs,” he said.
He noted that in recent time, manufacturing activities declined in Nigeria, as most companies were affected as a result of the global economic meltdown that further led to the closure of the industries as unfavourable conditions lingered, particularly for those industries which depend on importation to survive and had to spend more foreign currency on imported raw materials and spare-parts.
He stated that government’s ongoing efforts to reinvigorate the manufacturing sector if sustained are capable of diversifying the economy, as well as increasing its contribution to Nigeria’s prosperity.
“Moreover, government’s policies have been directed towards revitalising the “ailing” manufacturing sector. For instance, in May 2010, the Government announced a $1.3 billion fund to help banks extend credit to the manufacturing sector, following the decline in available financing after the onset of the global economic crisis,” he said.
He observed that notwithstanding these positive developments arising from the reform process, the Nigerian economy, especially the manufacturing sector is still confronted by serious challenges, structural imbalance and lack of diversification.
He stressed that the current policies of Government targeted at the real sector were also inadequate and prevent the domestic manufacturing industries from flourishing; as high youth unemployment, poor infrastructure and widespread insecurity, have continuously emerged as major challenges the government will have to tackle head-on.
“This is because the real sector (manufacturing among others) is the catalyst needed for the transformation and sustenance of the economy to prosperity,” he said.
He said that this therefore brings to bear, the need for OPS to play its expected role in supporting Government efforts to revitalize the manufacturing sector by developing a responsible working relationship with the Government regardless of its political complexion, under the much canvassed Public-Private Partnership (PPP) arrangement.