The future of Nigerian manufacturing sector is bright despite present challenges, the President and Chairman Board of Directors of the African Export-Import Bank (Afreximbank), Prof. Benedict Oramah has said.
Oramah, who delivered the annual lecture yesterday to mark the 47th Annual General Meeting (AGM) of the Manufacturers Association of Nigeria (MAN).
The lecture was titled “From Commodities to Global Manufacturing Hubs: The Road Ahead of Nigeria.”
Meanwhile, President Mohammadu Buhari, who was represented at the meeting by the Minister of Industry, Trade and Investment, Richard Adeniyi Adebayo, assured manufacturers of his administration’s continued support for the growth of Nigeria’s industrial sector.
Oramah’s optimism was based on the opportunities provided with the coming into force of the African Continental Free Trade Area (AfCFTA) agreement that opened up a wider market of 1.2 billion people to Nigeria’s manufacturing sector.
He argued that the opportunities offered by the AfCFTA could make Nigerian manufacturing more competitive in Africa and transform it to become more competitive in the global market. He also stated that the rising middle class and urbanisation in the country as well as the continent would provide market for Nigerian manufactured goods.
Another factor that would boost the Nigerian manufacturing, he said, was the gradual exit of China from labour intensive manufacturing to capital intensive manufacturing, which would leave a gap in the global market that could be filled by light manufactured goods from Nigeria.
He said: “Nigeria, and indeed the entire African continent will have themselves to be blamed if this supply gap is filled from outside the continent.”
The President of Afreximbank also pointed out the potential of Nollywood to boost some segments of the country’s manufacturing sector.
“Although it will not seem so obvious for some of us, the success of the Nigerian creative industry can be a boost to Nigeria manufacturing sector just the same way jeans was spread around the world by the American movie industry, which in turn boosted the USA textile industry.
“The Nigerian movie can be used to create a unique Nigerian brand that can endure,” Oramah said.
He also challenged the relatively strong and capitalised Nigerian banking sector to support the emergence of virile manufacturing industry in the country, in the same manner the Chinese banking sector was crucial to the emergence of China as a global industrial hub.
“There is no reason why the Nigerian banking system cannot do the same thing,” he said, adding that, “It is on the enterprise of the members of MAN that Nigeria’s future prosperity can be built.”
Oramah said that the era when inconsistency in government policies were the bane of the Nigerian manufacturing sector was coming to an end as government was turning a new leave and embracing policy consistency, adding that the main energy for growth is government policies and availability of finance.
He, however, pointed out that the Nigeria’s quest to become a global manufacturing hub could not be pursued in a vacuum. It has to mesh all ingredients of its potential together because the dominant characteristic of the emerging manufacturing trend “is the ability to manufacture competitively and availability and access to market.”
He recommended that Nigeria should rethink the assumption that the path to industrialisation is achieved by adding value to commodities a country is endowed with, like processing cocoa beans into cocoa butter.
“This kind of thinking is not always true and perhaps one of the reasons for Africa’s poor industrialisation efforts. Production is the function of labour and capital. Therefore, our industrial policy should be driven by the relative cost of labour and capital.
“Expensive converting of natural resources into industrial goods in an economy with scarce capital may not be the optimum part to industrialisation for that country, especially for the textile industry.
“Rather, Nigeria should prioritise targeting labour intensive industrial policy. This is in appreciation that Nigeria’s most abundant resource is its labour and not oil or cocoa. Transition to heavier industry can be made later. At the initial stage, the emphasis should be on labour intensive manufacturing.”
He attributed Africa’s low level of industrialisation and intra-continental trade to colonialism and its policies that saw Africa as place to take natural resources from and dump manufactured goods. These policies denied Africa the benefits of the first industrial revolution that began in the early 19th century.
But the time has come for the continent to move away from commodities and unlock manufacturing in order to bring prosperity to Africans.