Despite the fact that companies having been closing shop and many others moving out of the country due to the unfavourable manufacturing environment, some manufacturers are optimistic that there is a lot that can still be tapped from the manufacturing environment.
Aliko Dangote, president of the Dangote Group of Companies, in an interview with reporters in Lagos on Thursday, argued that despite the challenging environment, there are still many opportunities for companies to survive by tapping into the market potential in Nigeria. He said “Operating and expanding businesses in the country has not been an easy task because of the manufacturing environment especially in terms of power supply. But because we are Nigerians and we believe in the country, we have made it a point of duty for our businesses to be totally committed to the social, cultural and economic well being of the Nigerian environment.
“We know this is the only way of building an entrepreneur and providing employment for the country. This is why we have studied the Nigerian living habit and try to render our services towards that end,” he added.
The operating environment
The unfavourable environment has been a source of concern for manufacturers, leading to the sack of many workers in the sector.
Figures from the Manufacturers Association of Nigeria indicate that over 800 companies have closed shop in Nigeria in the last nine years; some however believe it could be more, as many now prepare to pack up on a daily basis.
Companies leaving the country complain of high manufacturing costs, which reduce the competitive value of their goods in the international market.
Coca-Cola Nigeria, in September, relocated Nigeria’s only concentrate factory from Ogun State to Switzerland, because of high operational costs which made their products unable to compete effectively at the export market, even in the neighbouring West and Central African countries.
“The country’s manufacturing situation has made the plant’s operations unsustainable in the light of today’s global economic realities because the company had only been producing for the Nigerian market alone” the company said.
Other industry operators also complain about multiple tax by the governments, lack of access to funding amidst high interest rate charges by banks.
Tough times never last?
Bashir Borodo, the president of the Manufacturing Association of Nigeria (MAN) told NEXT on Sunday in a telephone interview that though the sector is going through trying times, many are still hoping that things will get better.
“The manufacturing sector has been going through some tough times in recent times, though some companies are pulling out and some closing up due to the challenges we believe not all of them will be leaving.
“Most of the companies know the advantage of the Nigerian population to market their products; though it is sad, but we believe there is hope. We have been pleading with the government to act fast in restoring the power sector. With an effective power sector, more companies will be coming in instead of moving out. The government needs to get serious in restoring power and infrastructure in other for the sector to keep thriving,” he said.
Effect on the economy
The combined effect of all these have an impact on the sector’s contribution to the nation’s Gross Domestic Product (GDP), which is now 3.6 percent as at last year, down from 4.04 in 2007.
Mr. Borodo said the current trend in the sector is having a negative impact on the work force as more people are losing their jobs daily as companies close shop.
Currently the real sector is thriving on imported products, which have now overrun the locally made ones. With most of the goods coming with low price regime, the made-in-Nigeria ones can barely compete, thereby contributing to the already high rate of industries’ mobility.
Mr. Dangote insisted that industrialisation is the pride of any economy, saying “It is with this in mind that we try to understand our environment and operate within the scope. With the large population of Nigerians and the understanding of the market trend, listening to consumers of what they want has been a major strength for our survival.
“We have been able to survive and even expand and diversify into various sectors by been informed by the customers and not resenting what they have to say and with this, we try to give Nigerians what is of quality and important to their every day needs,” he said