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Nigerian Industries
Hadiza Wada, DBA ...April 3, 2010
Nigerian Industries have been undergoing a steady but rapid decline. According to most sources used in this paper, one of the most severe blows that crippled Nigerian Industries was the introduction of a programme from IMF and the World Bank titled the Structural Adjustment Program SAP. The program plus subsequent policies of the federal government, especially those related to export and import policies, and provision and maintenance of adequate infrastructure were others.
Relative to other Sub Saharan countries, Nigeria is pretty much well ahead industrially. Most developing nations up to about nineteen seventies were attracting only those industries that manufacture what one may call, the non-essentials. It was quite clear that the developed nations were not interested in allowing them industrialized realistically. When you look at the ratio of industries many such countries have, they tend to be in beverages (usually coca-cola, and other locally named soda). Nigeria even at that time had a few more types of industries manufacturing some of the essentials every nation needs, including pharmaceuticals, textile, shoes and leatherworks, plastics and other essential industry. When it comes to Nigeria, usually the inadequacy relates to not manufacturing a significant percentage of such goods to satisfy even reasonable demands for them.
Today however, Nigeria could do much better than where it stands. It appears that more private businesses and investment companies are interested in setting up even more industries, but they appear to face some real challenges that make it difficult to actualize their dream. The Manufacturing Association of Nigeria MAN President Bashir Borodo described the challenges as Lack of adequate funding; diminishing power supply forcing manufacturers to rely on individual generating alternatives run on price hiked gas (inadequate). According to Borodo:
“Transportation costs due to bad roads, police check points and the spiraling costs of fuel have helped to cripple manufacturing. Bad roads, unfriendly industrial policies by government and non-availability of raw materials, have all combined to drive 355 industries out of 385 MAN members from Imo and Abia states in less than 11 years of Nigeria’s democratic government.”
Kano, the home base of Bashir is the second largest manufacturing city in Nigeria, after its port city of Lagos. A paper co-written by two members of Bayero University Staff from Kano, Dr. Badayi Sani and Sa’id Suleiman Senior and Principal Lecturers of Economics respectively, also described many factors that have contributed to crippling the manufacturing base of Kano and the country in general. “Though, the state has witnessed a massive decline in its industries, and industrial activities, in line with the national trend, the state can still boast of over 350 large and medium industries.” Such industries include Food processing, Clothing and Textile; Pharmaceuticals, Paper Mills and Stationery, Plastic, Metalwork and Tannery.
Among the dooming policies articulated by the paper are (a) wrong and inconsistent monetary policies of the federal Government. One of such policies was also an IMF based one, i.e. devaluation of the national currency. It came with the Structural Adjustment Program package of the IMF in the 1980s. Its liberalization policy made cost of money or loan expensive (because regulatory issues were relaxed and left to the banks) and made it possible for banks to engage in business with less patriotic businesses that move capital away from industries and farming. Such liberalization policy of IMF was described by the duo in the following words:
“This policy in the name of making our industries competitive internationally has also caused industrial decline not only in Kano but in the whole country. Given the state our industries and the environment in which they operate there is no way we can make them to compete on equal terms with more mature and long established industries with superior and higher quality products from south East Asia and other advanced countries.” (Drs Sani, Sulaiman, BUK)
The second reason relates to infrastructural decay. This includes inadequacy of power supply, network of roads, and the deterioration and failure to rehabilitate the rail system. “The lack of telecommunication services particularly in Chalawa and part of Sharada and Tokarawa / Jogana areas has also been cited as one of the factors responsible for the collapse of industries in Kano. The role of telecommunication in speeding up the process of ordering and delivery of goods both finished and un-finished products or raw materials can not be overemphasized.”
A trend is reported to have begun in Kano, where businesses especially those belonging to immigrants from foreign countries have started relocating. BBC reported recently that factories such as Holborn Textiles and Lakonda Furniture have moved to neighboring countries such as Ghana where the infrastructural capacity is not so affected. A local official of MAN in Kano, Ali Madugu, told BBC that about 60% of the problems manufacturers in the city face could be traced to lack of electricity. Another source says even the industries still in business today in Kano, which he put the figure at about 150, do so at a fraction of their usual capacities, citing that most have to depend on government patronage to survive.
In Kaduna, the major problem is the closure of the textile industries. After about 43 years of ongoing fight to remain open, in October 2007 the United Nigeria Textile Ltd (UNTL) finally closed it doors and had to let go thousands of its employees. As per an article about it run by Daily Trust and written by Sani Babadoko at that time, at the time of it closing, it was producing about thirty percent of its capacity. The Kaduna headquartered textile industry established first immediately after independence from foreign rule starting in 1962 with Kaduna Textiles limited, which soon became the igniter for rapid expansion to many others such as Arewa Textiles, UNTL, Finetex, Nortex, Unitex and Supertex in Kaduna.
The provision of food, clothing and shelter is paramount to any nation and its governmental activity. The reason covering all aspects from social to economic. Kaduna textile was partially fulfilling that basic need. Today however, due mainly to bad industrial policies, cheaper imported textiles have flooded the market, forcing closures and teeming unemployment for the industry. According to Babadoko:
“Trouble started for the industry with the introduction of the Structural Adjustment Programme (SAP) in the 1980s. The programme imposed by the Bretton Woods institutions (World Bank and the International Monetary Fund, IMF) prescribed the removal of all barriers to trade, removal of all subsidies on goods and services. Soon the cost of production escalated. The deregulation regime also excluded protection for the local industries, including textiles. The Asian textile companies, especially those from China quickly took advantage of this and started flooding Nigerian markets with sub-standard fabrics. The Asian countries were backed by their comparative advantages such as good infrastructures, better export incentives at home and cheap labor in their countries. Recent reports indicate that China exports over 40 million metres of fabric into Africa with over 70 per cent coming to Nigeria.” (Daily Trust)
According to a UNTL manager some of the real problems with even the 30% capacity they struggled to produce include, “brazen activities of smugglers of textile products and infringement of our trademarks and designs on smuggled goods have worsened the situation… our traditional markets have been flooded with smuggled cheaper but inferior fabrics, often passed on as our products.”
With problems such as these no industry will find the motivation, in spite of the lure of profit and continuing job provision for people, to continue to survive. Governmental policy is the problem, period. Nations ordinarily push their population towards industrialization with the main purpose of internally satisfying the nation’s needs. Even when Problems such as these emerge suddenly, they require strong governmental backing.
No serious government in the world will sign the dotted line on any program they frankly know will strangle their industries, nor sit idle while such problems become endemic. It should get into emergency gear as soon as it realizes the problems with immediate enactment and implementation of policies and legislations. The cooperation of the nation’s citizens in curbing smuggling is another area that needs to be stressed.
Lagos State at the Southern Gulf Port of Nigeria is the most industrialized city of the country. One major reason it continued to sustain its lead is its location as major Port City on the West African Coast. For longer periods it was catering for not just Nigeria but neighboring country’s needs. It provides to this day the ease of importation and exportation. But Lagos has also suffered most of the same ailments.
Writing in September 2009, Modupe Ogunbayo enumerated some of the problems generally faced by Lagos industries. Giving an example of a polyester textile plant inside the Spintex Company Limited, Lagos she disclosed how they moved from full manufacturing within the country providing employment, training and know how to Nigerians, to importation of the same textiles made by other rival industries abroad due to governmental monetary policies (IMF and World Bank imposed).
Banking and import export policies have virtually strangled such industries allowing influx of imports from their former competition from Asia mainly. Even multinational companies such as PZ have had its share of such problems. According to Ogunbayo’s sources PZ’s recent mass layoff of staff will soon be followed by an overhaul where they will reorganize and come out as importers of the same goods they use to manufacture within the country. They also chose that line because that is the only way they could turn a profit in their line of work. 40 companies in the area of non metallic products such as tire, shoes etc have also closed their operations within just one year, laying off over 80,000 employees. These include Michelin, Dunlop, Mercury, Pfizer, etc.
One of the most affected that should really be lamented, even by the accounts from the Lagos article, is the textile industries which were mostly located in the northern states of the country. The reason given by Paul Olarewaju, the Director General of the Nigerian Textile Manufacturers Association NTMA is because it is one of the industries that has become truly Nigerianized industrially speaking. It generally utilizes locally produced raw materials such as cotton from local farmers, and chemicals (principally dye) from Nigerian chemical industries.
“Before 1997, the Nigerian textile industry was the second largest in Africa after Egypt with over 250 vibrant factories and running above 50 percent capacity utilization.” says Olarewaju. But today its market share in the nation is just 20%. In a seminar convened in Kaduna to find real solutions to the textile industry, the figures revealed by the Nigerian Textile Manufacturing Association NTMA were staggering. The Nigerian Textile Manufacturers Association (NTMA) argued that “the industry, which used to be the second largest employer of labor after government has lost 577,000 workforce between 1992 and 2006.”
(c) The Optimist Voice. All Rights Reserved.
