'GOVT SHOULD MAKE POLICIES THAT WILL AID DEVELOPMENT OF MANUFACTURING SECTOR'
The Deputy Managing Director, Dangote Flour Mills Plc, Alhaji Shuaibu Idris, speaks on the challenges and way forward for the development of the Nigeria's manufacturing sector. He spoke with SULAIMAN ADENEKAN. Excerpts
How would you describe the state of Nigeria's manufacturing industry?
The manufacturing industry is in a fairly challenging state just like every facet of the nation's economy. Of course, they are surmountable challenges witnessed in the ordinary course of our businesses; I will say that the manufacturing industry is at a verge where a lot of issues need to be addressed so that the sector could move forward.
What are the challenges facing the industry?
The challenges are quite enormous; let me highlight the major ones from my own perspective. Number one is the issue of electricity; energy has been a major challenge. A situation where every company has to buy a generator to enable them run their businesses is a serious challenge. Imagine a middle sized company that needs to buy 100KVA generator in order to commence operation, you still need to buy diesel to run that generator.
The cost of that generator is estimated at about N10m which you may have to borrow at an interest rate of 20 to 25 per cent or take the money from investors' money as an equity, which is an additional expenditure that a business could avoid if the nation has adequate, uninterrupted electricity supply. When you look at bigger businesses you may need 1000KVA which is sold between N30m to N50m, this is enormous.
Secondly, another major challenge facing the manufacturing industry is the issue of human capital. In Nigeria today, most of the graduates from our Universities and Polytechnics are either not ready for the labour market or they are not fit and proper to be considered for employment and that is why most organisations have what they called Graduate Employment Scheme, where the graduates are trained for one year at a cost to the organisation, because they are being paid full salary and they are not adding value, they are retrained to enable them fit to work for the organisation.
That is why you see a lot of companies going abroad to look for Nigerians in diaspora, or Nigerians that have studied abroad and are ready to come back or even recruit foreigners to come and work for them. There are also challenges of security, water, multiple taxation among others. At every Organised Private Sector's fora, manufacturers do voice out their concerns and not much is happening in that sector.
How can these challenges be tackled?
I think once you identify a problem, 50 per cent of the solution is obtained. The fact that we identify that these are the challenges, I think to address challenges squarely is a responsibility partly of the government and that of the general society.
One, if you take energy for example, no one can do better than government, yes, we have seen some level of encouragement from government to allow the Independent Power Project plant, that are coming on the stream, those are partnership between the private and public sector, but still there are challenges in doing this.
Quite a number of IPP may not be able to sustain their operations because the rate at which the energy they generate is being bought from them by the Power Holding Company of Nigeria is too ridiculous and most of them may not be able to operate profitably.
Secondly, we could also exploit the possibility of a massive pipeline that will supply gas to each and every industry. If gas is made available to most of the manufacturers, the use of diesel could completely be avoided and gas is a much cheaper energy than diesel, these are ways we could ameliorate the challenges facing the manufacturers in the country. When you look at human capital, I think the best thing to do is to enhance the quality of our education from primary, secondary to tertiary educational level, so that by the time they are leaving the Universities they will have skills that will make them employable and useful to the labour market.
Once you have a building on a faulty foundation, one will have a challenge. The quality of our University graduates is a reflection of the secondary schools that feed the universities with low quality products and you will end up with the garbage in garbage out syndrome. Government should also provide water through the construction of dams and broadene the economic base of the nation to engage people and stem insecurity.
Which of the government policies is affecting the operations of manufacturers in the country?
Virtually all polices have direct or indirect association with manufacturing. For example if taxes are too high, manufacturers will be dissuaded, because government will take whatever money the investors are making in form of taxation from them. Also looking at the policy on import prohibition, Nigeria manufacturers may not be in position to compete with their counterpart in other countries because there are no polices to protect them to enable them be internationally competitive. When government insist that excise duties must be increased and must be paid, the consequential cost of payment of such duties will have to be passed on to the consumers and if a company is not able to pass such cost to the consumers they may be operating at a loss and if they do so for a period of time they may eventually close down.
As at today, there is virtually no textile industry in operation because the country has become a dumping ground of imported textiles from China. Also the interest rate, exchange rate, smuggling also have impact on the operations of the manufacturers.
What is the way forward for the sector and your advise to the government?
The way forward is that we will and should continue to partner with government via our respective agencies such as the Manufacturers Association of Nigeria, Nigerian Employers Consultative Associations and the respective Chambers of Commerce and Industries, such that government policies, programmes and systems should be tailored to help Nigerians and not make the country a dumping ground. Secondly government policies and programme should also be made in way that there should have been discussions and there should always be discussions in the respective associations, to bounce up the ideas because no one have monopoly of knowledge and ideas, when you have such kind of discussions, reasonable policies could be made that will impact positively in the live of Nigerians, because the manufacturers in the country are not operating in a vacuum , as they provide employment opportunities, corporate social responsibility and pay taxes to the government. When they partner government in terms of policy making, I believe the future will be bright.