Ahmed: Quality Infrastructure Will Improve Manufacturers’ Output

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Mansur Ahmed
President of the Manufacturers Association of Nigeria (MAN), Mr. Mansur Ahmed

The President of the Manufacturers Association of Nigeria, Engr. Ahmed Mansur, who is also the Executive Director, Government and Stakeholders Relations, Dangote Group, in this interview speaks on how the sector can be strengthened for optimal performance. He also bares his mind on the African Continental Free Trade Agreement and how Nigeria can optimise opportunities inherent in the continental trade deal. Chris Uba brings the excerpts:

What is your assessment of the performance of the sector since 2018?
The economy went into recession in 2015 and effectively exiting in 2017; and 2018 was a flat trading year. We came out of recession, and we grew positively and then negatively, and positively again. But on the whole, the growth has been marginal over the period. Not just for the sake of economic support, I think that we are, now, beginning to see some stability in the growth trajectory. And we hope that this will be sustained during the current year and even enhanced in the year 2020.

Have those challenges that instigated the negative growth been fully addressed?
Not all of them. Not fully, if you like. First of all, the most critical issues for the manufacturing sector are the infrastructure, especially, electricity. Electric power is the biggest constraint to the manufacturers. And while some efforts have been made, we have not seen any significant improvement; no improvement has been made in the supply of electricity. I believe the President has recognised that in his recent speeches. Other areas, of course are the transport sector, especially, the ports infrastructure. Again, efforts have been made but the impacts have been limited. And perhaps, that is one of the reasons why growth has been marginal and extremely slow. So, these issues need to be addressed firmly. We are glad that the President is, now, looking for a more comprehensive approach to resolve the issues. We understand, for instance, as you must have heard, that they have signed an agreement with some foreign companies to actually work toward raising electricity supply to the level that is more healthy than 5000 megawatts over the next two or three years. I think that will be necessary because without adequate and sustainable electricity, it will be very difficult for the manufacturing sector to survive in the way we are hoping that it will.
But, what is the current level of capacity utilisation in the sector?

Well, it is still fluctuating around 60 per cent. I think the latest figure is about 57 per cent; this is an aggregate figure. It means that there are many members of the sector that are doing well below that level. And I think, clearly, it is indicative of the fact that the supporting environment is not there. It is also a problem of demand. You may also have noticed that in the recent PMI (Purchasing Managers’ Index) figure that have been issued, that our warehouses are still high largely because there is no demand even when production is not up to capacity that one will be happy with. Unsold inventory is still very high. It is indicative of lack of patronage.

What happened to Executive Order No. 5 signed in 2018 by the President which made it mandatory for all Ministries, Departments and Agencies (MDAs) to patronise made-in-Nigeria products without compromising standards?

There are two major issues. One is that since the Order was issued in 2018, and we have been pushing the regulators, particularly the Bureau for Public Procurement (BPP), to ensure that the order is executed; that is to comply with the Order. But parastatals, as you know, take time to respond to these directives. We are still working with them. We are still hoping that there will be some response. I think it will be absolutely essential. And we have discussed this with the Bureau for Public Procurement that we must have a monitoring framework that will enable us to see where the parastatals are procuring goods that are being produced in Nigeria or procuring them from abroad. Over many years, this has been the practice, which, perhaps, many of our parastatals have been used to; but it will take some time. But we are working hard to ensure that that the directive is complied with.

The projection is that by next year, Nigeria is expected to join the coveted club of top 20 economies in the world. When viewed against the backdrop of the prevailing situations in the country, do you think this objective is still realisable even with the Economic Recovery and Growth Plan (ERGP)?

This is the objective that came out of the Vision 2020 plan. And I think, to be honest, we know that many of the things that supposed happen in that plan have not happened. The infrastructure has not been upgraded to the extent that it is should be; the business climate has not improved significantly. And if anything, that development has been negative. These have to do particularly, with the security situation in the country.

So, the objectives have not actually happened. We believe that, yes, this Vision 2020 plan should be achievable but a lot has to be done in those areas of challenges to strengthen the economy. So, perhaps, 2020, may not be a realistic target date but I believe that if the policies that are right are put in place, such as the ERGP are actually executed properly and the necessary investments in the areas such as infrastructure, are made, then I think it may not be 2020, but soon thereafter. I think we should be able to achieve that. Today Nigeria is number 29 in terms of size of the economy. So, it is not a big jump to be in the top 20. But a lot of work has to be done. As you know, in Africa, Nigeria is the biggest economy and has remained so. Again, I believe that this is not a difficult position to maintain. However, if we relapse; if we don’t continue to invest in the right areas of our economy; if we don’t continue to provide the necessary supportive environment to our productive sectors to continue to scale up, the chances are that we may lose that position.

MAN’s position on African Continental Free Trade Agreement (AfCFTA) is already known. But must we continue to talk of protection of local industry? Do you think there is also the need to make the local industries competitive to be able to compete with their counterparts in other parts of the world?

Our position with regard to AfCFTA has not always been fully understood. We did not say don’t sign. We did not say continue to protect the economy. What we said was that before you sign let us study the agreement vis-a-vis the state of our economy; let us identify what will be the key challenges that we will face when this agreement is signed. Let us plan and know how we can mitigate these challenges. What are the opportunities we can exploit when this agreement is signed? And let us plan the things. And ensure what we really need to do to mitigate those key challenges and risks and to be able to scale up capacity to optimize these opportunities. And that is exactly what we have done. We have done in-depth study of the various sectors of the manufacturing sector. The government, itself, in response to our suggestions also undertook a broad study of the economy along those lines. And I believe that greater consultations have taken place more than what should have been the usual thing. All key stakeholders were fully consulted. The committee that was set up by the President was asked to assess the readiness of the Nigerian economy to participate and benefit from the agreement. That committee did a very, very good job. And of course, the Manufacturers Association of Nigeria contributed significantly to that committee. It participated fully in the presentation. The committee came up with a very sound recommendation, which I believe, enabled the President to have time to identify and at the same time things that we need to put in place to prepare ourselves for the economic integration. And the positions we should take during the negotiation to ensure that we maximise the opportunities Nigeria is going to benefit from the regional economic agreement. It is not about protectionism. No, it is a question of position and we need to prepare to make sure that we can take full advantage of the agreement. Our economy is the largest in Africa. We have the largest market in this region and therefore, there is no doubt that we stand to gain if we do the right things. But the issue we are concerned with is: are we doing the right things? Because, if we are not doing the right thing, we will lose those advantages. And that I think was what has happened and we are very happy that today, the country, as a whole, is now more aware of the issues involved the African Continental Free Trade Agreement. We are now more prepared and in a much better position to take advantage of that agreement. More importantly, I think, now, we are in a position to ensure that whatever policy prescription we chose; whatever position Nigeria takes in the course of negotiation of this agreement; position that Nigerians are fully aware of and are fully behind, which will be a different thing if these processes did not take place; if we had allowed our public sector agencies to just to go and sign things without our knowing because at the very list, we may sign things that we are not fully prepared for. And I think that is the value of what MAN has been able to do in this regard.

Most of our exports are tested in foreign laboratories. That is the reason you see goods produced in our country in Europe bearing exports from Ghana because they were tested in Ghana. Nigeria does not accredited laboratories where exportable goods can be tested for export. What is MAN doing about this?

Indeed, a few minute ago, before you came in, we had a meeting with the Standards Organisation of Nigeria (SON). And one of the key issues we were discussing how to improve the quality infrastructure in Nigeria, particularly, to support the participation in the AfCFTA. We need to improve our quality infrastructure both physical infrastructure as well as non-physical. There is a need for the availability appropriate laboratories, availability of appropriate institutional support for quality, the necessary rules and procedures, guidelines that will ensure that our manufacturers meet standards even quality standards. And from our discussion with SON, the agency and institutional organisation is fully involved in developing the continental quality framework that will enable us to resolve the quality issue as Nigeria participates in AfCFTA. So, quality infrastructure is very important so that we can significantly improve our quality performance in order to take advantage of AfCFTA. But there is another issue of quality which is also important. As we go into this agreement, we must also guard against situation where substandard quality products are brought in from other neighboring countries in the name of African products when they actually do not meet our own quality standards. And I think, one of the key issues is that the quality framework must be considered both at the national level and of course at the continental level. We should not accept a quality level in Nigeria which is lower than the quality level of goods from Togo, for instance.