Parlous state of Nigeria’s  manufacturing sector under Buhari administration

In his farewell speech on Sunday, the former President, Muhammadu Buhari, gave Nigerians the impression that he used his eight years in office to address the multifaceted economic problems that have assailed the country over the years. He gave the impression that all is well with the economy.

In that address, Buhari said “our administration also provided an enabling environment for the private sector to engage in businesses for which their return on investments is guaranteed.  The private sector proved a strong partner in our drive to build a resilient and sustainable economy as evidenced by the growing number of turn-key projects in various sectors of the economy.”

Unfortunately, the former president’s speech did not reflect the socioeconomic realities in the country. One of the severally neglected sectors of the economy, the manufacturing industry subsector has  remained an endangered species in last eight years.   In spite of its  importance in economic transformation, the Nigerian manufacturing sector  has yet to make any serious impact in the socioeconomic development of the country. The condition of the sector regressed in the last eight years of the Buhari administration despite the mouth-watering promises by the regime to revive the sector.

Over the years, the manufacturing contribution to the Gross Domestic Products ( GDP) has been hovering around the 9 per cent  mark, below the double-digit benchmark for attaining the developed industrialisation status. The sector contributed about 8.59 per cent  to the GDP in the third quarter of 2016 which is lower than the 9.67 per cent  recorded in the corresponding period of 2015.

According to the Nigeria GDP report by National Bureau of Statistics (NBS), the third quarter was quite lower than what was obtainable in the second quarter which stood at 8.95 per cent. In some years, zero growths were recorded.  This has been the trend since  2015 ,the year in which Buhari assumed office,  

The Nigeria’s manufacturing sector is still largely hamstrung by poor and deteriorating infrastructure, deepening weak domestic demand, high and unplanned inventories, unbridled influx of cheap imports of substandard, fake and used products, including dumping of all manner of finished goods.

 Competition with sub-standard imports and illegally manufactured/ uncertified local goods has led to the lack of competitiveness of ‘made in Nigeria’ goods. Imported alternatives, despite their poor quality, are cheaper and typically considered more appealing despite their quality and safety issues.

On internal security, for example, Vita-Foam had to close its manufacturing plant in Jos while Nigerrite Managing Director was at one time kidnapped along with his wife.  There is also the challenge of inappropriate fiscal policy. Government’s procurement policies, for example, do not encourage local content production. As such, the Nigerian market is inundated with a myriad of foreign goods, a high percentage of which can be produced locally, given the right policy atmosphere.

There is also  the issue of  costs of funds arising from depreciation of the Naira against major currencies coupled with high lending rates and extreme difficulties in accessing credit for working capital just as problems of supply of petroleum products, particularly AGO (diesel) LPFO (black oil).

Some members of Nigerian business community who do not want their names  in print agreed that  the manufacturing industry is crucial to every  nation’s economy. It plays a significant role in generating employment, increasing productivity, and driving economic growth. In Nigeria, the manufacturing industry is a critical sector that contributes significantly to the country’s GDP through job creation, wealth creation, and increased tax revenue for the government.

Specifically, industrial development, which is the prerogative of the manufacturing subsector is a precondition for eradication of unemployment and poverty from any country. This was the main philosophy behind public sector industries and joint sector ventures espoused by the founding fathers of this country. It was also aimed at bringing down regional disparities by establishing industries in tribal and backward areas with the aim of engendering economic development and improving the quality of life of Nigerians.

Unfortunately, however, the nation’s manufacturing industry has long struggled with a host of challenges that have prevented it from achieving its full potential. Some of these challenges have intensified in the last decade. Regrettably, despite the inability to take millions of people out of poverty by way of providing employment opportunities while also creating wealth, the government did not take concrete steps to enliven the manufacturing sector, which is the major contributor to GDP in other climes.

The Manufacturers Association of Nigeria (MAN), the umbrella body  of manufacturers ,  is unhappy about the state of the sector when it said that  the sector is gasping for breath. Its  quarterly research, aggregate Manufacturers CEOs Confidence Index (MCCI) shows that the confidence oscillated under the 50 neutral points: 44.4 points in Q1; 40.2 points in Q2: 43.3 points in Q3; and then 42.06 in Q4 2020, a trend  which shows  a strong indication of manufacturers’ lack of confidence in the economy in 2020.

At its 2021 presidential media luncheon, MAN  said significant among the challenges faced by manufacturers are difficulty in accessing foreign exchange (forex) to procure raw materials not locally available; high cost of electricity/power; and high cost of transportation. Others are low demand for commodity; difficulty in accessing funds; regulatory issues from numerous regulatory agencies; poor port administration and unavailability of raw materials; policy somersaults, but to mention a few.

The Lagos Chamber of Commerce and Industry (LCCI)  shares the same  perspective when it  said  in 2021 that  the figures of  GDP increase often attributed to the manufacturing sector  is not reflective of the sector’s current realities. It noted that the contribution has remained worrisomely below 10 per cent.

 The Lagos chamber also said: “The manufacturing sector suffered from headwinds such as scarcity of forex for import of inputs; weakened consumer demand due to weak purchasing power; high energy cost; logistical challenges; policy uncertainties; and harsh regulatory environment.”

 As a consequence, Nigeria  has  become the poverty capital of the world.  According to a World Bank report titled ‘A Better Future for All Nigerians: 2022 Nigeria Poverty Assessment’, poverty reduction has stagnated since 2015, with more Nigerians falling below the poverty line over the years. The international organisation projected the number of poor Nigerians to hit 95.1 million in 2022.

In other reports, Nigeria has been classified as the poverty capital of the world. This is because while the population of Nigeria is growing, the poverty situation is also competing with the population increase in the country.

 The United Nations Conference on Trade And Development (UNCTAD) has disclosed that additional 58 million Africans will fall into extreme poverty this year. This, according to UNCTAD report 2022, would add to the 55 million already pushed into extreme poverty by the COVID-19 pandemic.

 Buhari one time  claimed that his administration had lifted 10.5 million Nigerians out of poverty between 2019 and 2021,  but a foremost human rights organisation, Centre for Citizens with Disabilities (CCD), called on Nigerians to make poverty reduction a key campaign issue for 2023 elections.