Speech of MAN President at 51st AGM
WELCOME ADDRESS BY OTUNBA FRANCIS MESHIOYE, PRESIDENT, MANUFACTURERS ASSOCIATION OF NIGERIA AT THE ADEOLA ODUTOLA LECTURE FOR THE 51STANNUAL GENERAL MEETING OF THE ASSOCIATION HELD ON THURSDAY 19THOCTOBER, 2023 AT ORIENTAL HOTEL, VICTORIA ISLAND, LAGOS.
Protocols
Our Special Guest of Honour, His Excellency, Asiwaju Bola Ahmed Tinubu, GCFR, President of the Federal Republic of Nigeria, ably represented by the Honourable Minister, Ministry of Industry, Trade and Investment, Dr. Doris Anite.
Our Distinguished Guest Speaker, Olusegun Aganga, CON.
Our Special Guest, His Excellency, Otunba Niyi Adebayo,
Distinguished Guest, esteemed members, our media partners, Ladies and Gentlemen.
It is my great pleasure to welcome you all to the 3rdAdeola Odutola Lecture and Presidential Luncheon, being the last part of activities marking the 51st Annual General Meeting (AGM) of the Manufacturers Association of Nigeria (MAN).
On behalf of the National Council and members of MAN, I am delighted to welcome our Special Guest of Honour, His Excellency, President Bola Ahmed Tinubu, GCFR. We are indeed honoured by Mr. President’s kind acceptance of our invitation. We understand that he is not with us today due to the exigencies of his exalted office. We are however delighted that he is represented by the most appropriate and able Minister, our own Minister of Industry, Trade and Investment, Dr. Doris Anite.
Mr. President, may I also use this opportunity to congratulate you, once again, on your election as President of the Federal Republic of Nigeria. This is the first MAN AGM after your inauguration and we are pleased to have your Excellency ably represented in our midst.
We are enthused by the presence of the Honourable Minister. We know that these are early days since your assumption of office as Minister. Your dignified presence is a testimony of your commitment to fostering a strategic and close partnership with your first constituency – the manufacturing sector of our economy. You are the number one ambassador of Mr. President in the task of actualizing his promise to prioritize the growth of domestic manufacturing. We warmly welcome you to the 3rd Adeola Odutola Lecture and Presidential Luncheon of our great Association, the leading sector specific business membership organization in Africa.
We are equally honoured to have an illustrious Nigerian, a consummate accountant and accomplished international transformational economist as our Distinguished Guest Speaker to deliver the 3rd Adeola Odutola Lecture. He is no other than a former two-time Minister of the Federal Republic of Nigeria; former Managing Director of Goldman Sachs, London; the founder of Nigeria Leadership Initiative and Aspen Global Leadership Network, Olusegun Olutoyin Aganga, CON. We all remember him as our former Minister of Finance as well as Minister of Industry, Trade and Investment of Nigeria.
We are delighted to have His Excellency, Otunba Niyi Adebayo, a former Governor of Ekiti State and immediate past Minister of Industry, Trade and Investment join us on this occasion. We are happy to have you present the book “Turning the Wheel: A story of the Manufacturers Association of Nigeria” This is by way of public presentation of the foreword that you graciously appended in the book.
This AGM is an exceptional one. We are blessed with the unprecedented presence of three outstanding Nigerians, two of them are former Ministers and one of them a serving Minister! All from our number one go-to Ministry, the Ministry of Industry, Trade and Investment.
Similarly, I have the singular honour to acknowledge the presence of International Development Partners, members of the Diplomatic Corps, Directors and Heads of Ministries, Departments, and Agencies of the Federal Republic of Nigeria here present; Members of the Organised Private Sector of Nigeria, Members of the Business Community, our former Presidents and Directors General, Captains of industry, Scholars and our partners in the media space, I thank you all for coming.
The economy, and in particularly, the manufacturing sector has been the worst hit by the combination of external and domestic challenges. Starting from 2015/2016, the Nigerian economy expressed a recession triggered by the global financial crisis that was due to the sharp decline in the oil market. Just as we were beginning to recover from the recession, a global health pandemic emerged, disrupted economic activities and global supply chains, posing a significant threat to industries.
Your Excellency, our Association has taken due notice of your policy pronouncements, particularly within your first 100 days in office. Some bold policy actions, including the removal of fuel subsidy and introduction of managed float of the exchange rate, have elicited the commendation of most economic actors and stakeholders. The fallout of those measures have equally thrown up some policy imperatives that should be addressed in order for the economy to rebound and for the citizenry to appreciate and reap the long-term benefits of the various reform measures.
In addition, we seek your intervention to facilitate an engagement between the Central Bank of Nigeria and MAN to discuss the recent lifting of the restriction on access to foreign exchange on 43 items. We are confident that the outcomes of conversation will allow the CBN to achieve its objective of reducing pressure on the parallel market and effective control of the foreign exchange administration. At the same time, it will ensure that domestic production is not overrun by influx of imported alternative and our raw materials that are not locally available could be procured using the official market.
Your Excellency, since its inception, MAN has been at the forefront of promoting and advancing the industrial development of our nation. In the course of its journey, our Association has engaged in impactful collaborations and continuous engagements with the Nigerian government and other relevant stakeholders, both within and outside the country. MAN has consistently provided a platform for manufacturers to come together to share their expertise and resources, in order to expand the frontier of our economic development and foster cross-border value chain to achieve sustainable economic growth and development.
The Ministry of Industry, Trade and Investment remained our greatest ally. Your Ministry is the ladder that we climb to reach the Presidency and our ambassador to other Ministries, Departments and Agencies of Government. We are confident that you will raise the bar in this regard and that our collaboration and partnership will grow in leaps and bounds during your tenure.
THEME FOR THE 51ST ANNUAL GENERAL MEETING
Your Excellency, Distinguished Guests, Ladies and Gentlemen, the theme of this year’s Annual General Meeting is “Setting the Agenda for Competitive Manufacturing under the AfCFTA: What Nigeria Needs to Do.”
The motivation behind this theme is the manufacturing sector’s successive low performance over the years. At the same time, we are looking at the promising growth trajectory and development opportunities that are embedded in the African Continental Free Trade Agreement (AfCFTA) for the Nigerian manufacturing sector.
It has become a matter of necessity and urgency to deepen our awareness of the imperative of the AfCFTA; we need to develop the right strategies and concerted efforts to position our economy as the number one manufacturing hub of the African economy.
Evidences from several parts of the world, including China, the United States, Japan, Germany, and South Korea, have shown the importance of the manufacturing sector in building a resilient economy. As an example, in 2021, average manufacturing output accounted for as high as 35% of Ireland’s GDP growth; 27.44% in the case of China, and 48% of Puerto Rico’s economy. In the United States, it accounted for more than 60% of the total exports and about 35% of the US economy’s total productivity growth. In Nigeria, the contribution of the manufacturing sector to the total output is not higher than 10%, with an average growth rate of approximately 2.3% over the last five quarters. Manufacturing sector development is key to industrialization.
Sadly, the growth of industrialization in Nigeria remains at a very low ebb. Based on the African Development Bank (AFDB)’s industrialization index, Nigeria is yet to perform impressively. The UNIDO’s industrial competitive performance index has equally shown that Nigeria’s industrial sector has a low competitive capacity. There is no better time than now to confront the challenge of low competitiveness and abysmal performance of this important sector.
CHALLENGES OF THE MANUFACTURING SECTOR
Your Excellency, permit me to keep you abreast with some of the concerning issues militating against the performance of the manufacturing sector.
i. Multiple Taxation
An average member of MAN is subjected to no less than 30 different forms of taxes, fees, and levies. The consequences of the incidence of multiple taxation are immense and include the rising cost-of-doing business and rapid divestment in the manufacturing sector. These issues combine to depress demand; worsen job losses and increase the incidence of poverty and low revenue generation from the sector.
We are confident that the Presidential Committee on Fiscal Policy and Tax Reform will adequately address the matter. Our Director General represents the Organized Private Sector on the Committee and we look forward to working jointly with the representatives of your Ministry on the Committee to make the case for fair taxation of the manufacturing sector.
ii. High Cost of Borrowing:
Another constraining factor in the manufacturing sector is the challenge of high interest rate. The average bank lending rate for manufacturers is 26% per annum. We acknowledge the 9% interest rate on the N75 billion loan facility for a minimum of 75 companies that was recently promised by Mr. President. While commending His Excellency for this initiative, we are hopeful that it could even come at a lower rate and MAN would be given the opportunity to work with government to determine deserving sectors, agree the disbursement modalities and join in the evaluation and monitoring of its effectiveness. We believe that this inclusive approach will guarantee more success and create the basis for granting a much bigger emergency fund for the beleaguered manufacturing sector in the near future.
iii. Infrastructural Inadequacy:
Poor infrastructure, including inadequate power supply, poor road networks, and inefficient port facilities are serious impediments to the growth of the manufacturing sector. We look forward to government to improve investment and undertake effective reforms to guarantee reliable power supply; good road networks; and an efficient port system.
iv. Low Local Content Development and Patronage of made-in-Nigeria Products:
Nigeria has a low local content adoption and patronage of made in Nigeria products. We urge His Excellency to ensure effective enforcement of local content and patronage regulations. This can be achieved by strict enforcement of local content laws, incentivizing local sourcing of raw materials, and innovation in the manufacturing sector. Also, the public sector at all levels should, as a matter of national importance, step up their compliance with existing government directive on patronage of made-in-Nigeria products, including Executive Orders 003 and 005
v. Poor Sectoral integration of the manufacturing sector:
The manufacturing sector is one of the sectors of the economy with wide sectoral interlinkages. However, the low level of development of auxiliary sectors is disentangling the manufacturing sector from the rest of the sectors. This is more so in agriculture, iron and steel and mining sectors. This has resulted in a limited supply of raw materials and other input for the manufacturing sector. Therefore, it is essential to encourage backward integration and sectoral linkages to promote a more sustainable manufacturing sector in Nigeria.
vi. Shortage of Foreign Exchange:
MAN appreciates the new administration’s policy on exchange rate unification as part of the measures to address the forex crisis. However, the problem is only half solved as forex shortages and high rate persist in the market. Addressing supply inadequacy is critical to a resilient manufacturing sector and we urge government to intensify its current efforts in this regard.
I am confident that our Distinguished Guest Speaker will adequately address these issues and more, in greater details.
CONCLUSION
Your Excellencies, ladies and gentlemen, we are standing on the cusp of a new and critical era. Though the manufacturing sector is passing through hard and challenging times, setting a comprehensive agenda for the sector’s transformation will enhance its competitiveness and unlock its full potential.
MAN has always been a key partner to Government and remain willing, available and ready to support the Government in formulating and executing its policies
Therefore, we earnestly seek a summit to engage government at the highest ministerial level to discuss the fate of the manufacturing sector in Nigeria.
On this note, your Excellency, Distinguished Guests, Ladies and Gentlemen, I warmly welcome you to the 3rd Adeola Odutola Lecture and Presidential Luncheon of the Manufacturers Association of Nigeria.
Otunba Francis Meshioye
President
Manufacturers Association of Nigeria
