By Isaac Asabor
It is not an exaggeration to peep into the history of manufacturing in Nigeria, and recall that the Manufacturers Association of Nigeria (MAN), in 2009 declared that 820 manufacturing companies had closed down since 2000, surprisingly under civilian rule and rendered thousands of people jobless, even as the federal government at the time admitted that the solution may not be very quick in coming.
Retrospectively put, the then president of MAN, Alhaji Bashir Borodo, while addressing top government functionaries, policy makers and industrialists from across the country, during the 37th annual general meeting of MAN, in Lagos, disclosed that between 2000 and 2008 about 820 manufacturing companies have closed down or temporarily suspended production, and urged the Federal Government to take pragmatic steps to save the sector from imminent total collapse.
Borodo blamed the growing closure pattern of companies that was on the increase at the time in Nigeria’s industrial landscape on tough operating environment, unstable electricity, high interest and exchange rates, smuggling, high cost of AGO and LPFO to power their generators or boilers including multiple taxations and levies slammed upon the manufacturers by the tiers of government, among others.
According to him, “The lesson of the past few years have shown that if local manufacturers are to survive in a globalized world, the provision of energy cannot be compromised particularly in our peculiar situation where the upgrading of energy production had suffered almost 30 years of neglect. From all account, the level of investment required to reverse the decay arising from prolonged neglect would be massive”.
He added that apart from the problems of energy, other challenges faced by manufacturers were compounded in 24 months by unfavorable terms of credit to the sector, and explained that manufacturers continued to groan under the high interest rates and lack of long term credit.
Similarly, he said in the last six months, as the time he spoke on the issue, that macro-economic indices were disrupted when the exchange rate of the Naira fell suddenly by almost 20 per cent after a relatively long period of stability, and added that the combined effect of high interest rates and devaluation of the currency were responsible for hiked inflation.
Fielding questions on relocation of industries to neighboring countries such as Ghana, Borodo noted that it was a very worrisome development, and that the unfortunate trend was a matter of serious concern and should be halted in view of Nigeria’s unchallenged leadership role as the hub of industrial production in West Africa. He noted that no national industrialist would wish to ignore Nigeria’s market with its strength and potentials, and in the same vein said there was need to acknowledge that the development was the outcome of breakdown in infrastructure.
In the conclusion of his address, he stressed that the theme of the event was a wakeup call for Nigeria to remove infrastructure road blocks and provide incentives for manufacturing companies to thrive, and added that the reality was that notwithstanding the relocations already effected and others that may follow, the obvious and primary market target of the industries remained Nigeria.
He urged the Presidency to take pragmatic decisions and political will to implement the 7-point Agenda and Vision 20: 2020, as this will provide veritable platforms to harness the best of Nigeria and transform it in the shortest time possible.
At this juncture, it is germane to recall that the then Minister of Commerce and Industry, Chief Achike Udenwa, acknowledged that power was the major problem facing manufacturers in the country, even as he stressed that the Federal Government was determined to achieve the 6000 MW targets by the end of that year.
The government, he maintained, hoped to achieve the somewhat feat by vigorously implementing all projects under the National Integrated Power projects(NIPP), and assured that the effort will bring some measure of succor to Nigerians and manufacturers, and progress will be made. He said, “Be rest assured government is behind you. We really feel your pain. If there is no manufacturing industries, my ministry will cease to exist. The solution may not be very quick in coming, yet government is addressing them”.
In a similar vein in 2012, the leadership of the Nigerian Association of Chambers of Commerce, Mines and Agriculture (NACCIMA), said that more than half of the surviving firms across the country were “ailing”.
The startling disclosure was made by the then President of NACCIMA, Herbert Ajayi in Asaba, in a paper he presented at a zonal workshop on economic diversification organized by the Revenue Mobilization Allocation and Fiscal Commission (RMAFC).
He said at least 800 companies closed shop in Nigeria between 2009 and 2011, due to the harsh operating business environment, and stressed that the companies that survived the onslaught of the unfriendly business environment were having serious challenges as more than half of them had been classified as “ailing.’’
Unfortunately, given the resilient advocacies that were over the years variously exhibited by leaderships of the NMA, NACCIMA, Manufacturers, among other advocacy groups and individuals, it is sad to note that Nigeria’s rating on ease of doing business still remains appalling.
For instance, as gathered from Statista, a global data and business intelligence platform with an extensive collection of statistics, reports, and insights, “As of 2020, Nigeria’s ease of doing business ranked 131st worldwide, with a general score of 56.9. The highest scores were obtained in the fields of starting a business, dealing with construction permits, and getting credits. On the other hand, Nigeria’s performance in other fields was low, for instance in registering properties, trading across borders, and resolving insolvencies”.
Without sounding exaggerative, the situation has become so worrisome that not a few companies are leaving Nigeria so much that it has become unbearably worrisome, particularly as the trend is exacerbating the prevailing unemployment situation that the country has been beleaguered with for decades. For instance, GlaxoSmithKline Consumer Nigeria recently announced its exit the country GlaxoSmithKline Consumer after 51 years of operations.
While lamenting over the exit of the company from Nigeria recently, specifically in August 2023, Dele Oye, National President of NACCIMA, said at an event thus: “GlaxoSmithKline’s exit from Nigeria has dealt a major blow to the country’s manufacturing sector, which is already experiencing significant collapse amongst its local businesses”.
He said while the current administration has commendably set Nigeria on a long-term path to economic progression, it has been noted that some of the immediate positive economic policies of President Bola Tinubu have had an adverse effect on certain sectors of the country.
“In particular, the sudden rise in the price of petrol and abolition of the official naira rate has caused a significant backlash, eroding the already earned income and trading capital of several multinational companies that had established their previous earnings based on the official naira rate at the time,” he added.
At this juncture, it is germane to recall that some other companies that have exited the country are Michelin, Surest Foam Limited, Mufex, Framan Industries, MZM Continental, Nipol Industries, Moak Industries, Stone Industries and Procter & Gamble.
In March, 2023, Unilever, which started operations in the 1920s, announced that it was stopping the production of its legendary OMO, Sunlight and Lux home and skin care brands in a bid to cut costs so as to concentrate on higher growth opportunities.
Given the foregoing facts, it is expedient to confess that this piece was inspired by a recent news report that has it that Nigerians will no longer be able to place food orders on the Bolt Food app as the company is shutting down its food delivery service in the country from December 7, 2023. The company announced its decision as a move to streamline its resources and maximize its overall efficiency.
It will be recalled that Bolt, which currently offers food delivery services in 16 countries and 33 cities across the world, was launched in Nigeria in October 2021 after increased demand for food delivery services during the Covid-19 pandemic. Since its launch in the country, Bolt Food stated that it has partnered with over 10,000 restaurants, delivered over 1 million meals, and on boarded 23,000 agents and 12,000 merchants.
Finally, given a disquieting statistical fact that emanated from the leadership of the NMA that manufacturers were cutting down jobs and production to adjust to the economic challenges, it has become expedient in this context to urge President Bola Ahmed Tinubu and his team to revitalize the manufacturing sector.
The foregoing advice could not have come at a better time than now as MAN recently said that in the first half of 2022 that 2,818 jobs were slashed. Its report reads, “Based on MAN’s survey since 2013, cumulative new manufacturing employment was estimated at 1,686,725 at the end of 2022. However, in the second half of 2022, manufacturing employment dipped to 6,741, down from 8,508 and 9,559 recorded in the corresponding half of 2021 and the first half of 2022, respectively.”
In fact, against the preceding stark realities, it is expedient to urge President Tinubu to stem the tide of companies leaving Nigeria to other countries to the detriment of industrialization of Nigeria as a nation.
