October 16, 2021

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Nigeria @ 61: Pains, gains of real sector

By Merit Ibe

To liken Nigeria to a country with visible economic retrogression over the past six decades might not be an exaggeration. A number of companies have collapsed, while investors are going in droves to neighbouring West African countries to establish their businesses.

Despite efforts for Nigeria to become an industrialised economy with high sustainable growth rates, since October 1960, when it got its independence, stakeholders in the real sector believe that the level of industrialisation remains poor.

Amid the struggle, the country remains stagnant with increasing poverty level.

Industrialisation, which was seen as the only means to achieve growth and development, is yet to be accomplished after 60 years of nationhood.

The lack of industrialisation which has cost the nation high unemployment rate, food insufficiency, lack of investments as a result of poor infrastructure, flight of industries to nearby countries, low ease of doing business, dearth of investment, capital flight as a result of huge dependency on importation, inadequate raw materials, production of sub-standard goods, illiteracy/inadequate skilled manpower, among others, was made worse by invasion of the dreaded pandemic (COVID-19).

Weak infrastructure and institutions pose risks to job creation; they have adverse effects on efficiency, productivity and competitiveness in the economy.

Power supply remains a major burden on businesses. This is one area that Nigeria has been in decline since independence. It has consistently lagged behind the pace of economic growth.

Worse still, internal security worsened gradually to the extent that Nigeria has lost control of security in the North eastern region.  Accompanying this insecurity are religious and ethnic conflicts.

Specifically, the real sector, which  has contributed over $40billion to  the Gross Domestic Product (GDP) in the last 20 years in terms of total output growth, according to the Minister of Industry, Trade and Investment, Otunba Niyi Adebayo, is currently in pain.

The Federal Government has disclosed that the manufacturing sector has demonstrated over the years  that it is the backbone of the country’s employment sector, as it currently employs close to seven million Nigerians.

The Manufacturers Association of Nigeria (MAN)  is worried that the sector that should propel job creation, productivity and economic growth is encumbered with a series of challenges.

Ahmed Mansur, president, MAN, had said the economy could not grow sustainably without a strong and competitive productive sector, saying the manufacturing sector is the engine of economic diversification and growth.

Mansur said a robust manufacturing sector should be based on coherent and coordinated efforts resulting from close collaboration between government and manufacturers.

For the much anticipated African Continental Free Trade Area (AfCFTA) which kicked-off on January 1, with Nigerian markets being the cynosure of Africans, stakeholders are emphasising that the reopening of the land borders should act as succour to the manufacturing sector even as AfCFTA serves as avenue for manufacturers to penetrate new African markets. 

However, they projected that critical challenges such as forex scarcity, inconsistent foreign exchange policies, inefficient transport infrastructure, high production cost, weak consumer demand and the new competitiveness pressure foisted by the AfCFTA may dampen the recovery prospects of the sector. 

MAN had hinted that over 40 per cent of manufacturers are unable to access foreign exchange (forex), to enable them import vital raw materials, machines and spares that are not available locally.

Dearth of trade facilitation infrastructure, poor access to the nation at sea ports and longer turnaround time for clearance of cargo collectively stifle the smooth operations of manufacturing concerns.”

He also emphasised that the security situation in the country deteriorated in the last decade.

Chairman, MAN Apapa branch, Frank Onyebu in his view noted that the sector was experiencing more pains than gains as it has been neglected all these years, in spite of its huge potential.

“I feel we have not done well as a nation. The past 61 years appears to have been wasted. Isn’t it disheartening that most of the nations we started this race with have moved past us? We are still crawling in spite of our numerous resources. 

The manufacturing sector has been neglected all these years. In spite of its huge potentials successive governments have chosen to relegated the sector to the background. This is quite unfortunate because most developed economies owe their growth to the manufacturing sector. 

However, it’s not all gloom. We still have a chance to redeem ourselves. I call on the government to use the opportunity of our independent day anniversary to reset our collective button. Let us go back to the drawing board. We can’t go on the current course or we would certainly crash.”

Dr Muda Yusuf, Founder/CEO, Centre for the Promotion of Private Enterprise (CPPE) and also an economist, speaking on the gains in the economy, noted that over the past six decades the Nigerian economy has transformed significantly from a basically agrarian economy to an economy driven largely by services,  oil and gas. “While the agricultural sector contributed an estimated 60 percent to the country’s GDP in the sixties, its contribution has reduced to about 23 percent presently.

Conversely, the services sector has grown significantly since independence and now contributes over 50 per cent of the country’s GDP.

“These are indications of significant structural change that has taken place in the economy since independence. The service sector contribution to employment generation and revenue to government has risen sharply over time.

“The over two decades of uninterrupted democracy, since 1999 reflects relative political stability which is also good for the confidence of investors.

“The Nigerian economy had recorded impressive growth rate over the past decades although with a few instances of sluggish growth.” 

However, the former director general of the LCCI disclosed that  the challenge of creating an inclusive growth trajectory remains a major concern, adding that  while the economy had experienced some positive growth trend over the past six decades, especially in the oil boom era, the impact of poverty, inequality and job creation has been very minimal.  

Lagos Chairman, Nigerian Association of Small Scale Industrialists (NASSI), Gertrude Akhimien lamented the  lack of good leadership that had been the bane of the nation for years, noting that  good leadership will propel us to succeed as a nation. She cited a story of how Singapore rose from penury to becoming one of the biggest economies of the world and one of  the asian Tigers, due to good leadership.

She however, commended individual Nigerians who had showed themselves very hard working in spite of the difficulties. 

“Nigerians can succeed given a little  opportunity. That Nigerian spirit has always driven us to succeed no matter where we find ourselves in any part of the world. We succeed and show the stuff we are made of. For me that is the gain we have had as Nigerians.

“The nation has not been lucky with leaders. We don’t have leaders with vision that can drive the different sectors of the economy with the rig

The post Nigeria @ 61: Pains, gains of real sector appeared first on The Sun Nigeria.

Source: news