28th June, 2022
It is an exercise in self-delusion to think that a stable, highly valued naira can be decreed into existence. Even dictators who can cause multiple deaths by a few phone calls or mayhem by merely wagging their fingers cannot make it happen. That can only take place in Utopia…It is disheartening that the Naira is cascading downhill, compared to the US dollar. Right now, it is in the region of N602!
How strong a country’s currency depends on how solid is its production base. It is a matter of favourable balance of trade and payment equations or current accounts. The current account is all transactions other than those in financial and capital items. The major classifications are goods and services, income and current transfers. The focus of the BOP is on transactions (between an economy and the rest of the world) in goods, services, and income. Though Nigeria’s current account balance fluctuated substantially in recent years, knoema.com, reports that it tended to decrease from the 2001 – to 2020 period ending at -15.8 billion US dollars in 2020. A corollary of this is that it has a domino effect on how rich the citizens are or how high or low their human development index will be. It is a chain process. When we were growing up, the textiles used to run about three shifts. The night trips of the workers on their Raleigh bicycles at night were a beauty to behold. Those have slipped into the scrap heap of history.
Nigeria has somewhat become the graveyard of manufacturing companies. Carcasses of once buoyant companies litter big cities like Ijebu Ode, Ibadan, Kano, Lagos, Onitsha, and others. In his 5 April 2020 essay, Of Nigeria’s Dying Factories and Exodus to Ghana, published on myengineers.com, Babatope Babalobi, a doctorate researcher, Department of Health, University of Bath, UK, wrote: “World Bank Enterprise survey reported 322 private firms closed down in Nigeria between 2009 and 2014 due to stifling business regulations, corruption, and political environment. The Director of Economic and Statistics Department, for Manufacturers’ Association of Nigeria, Oluwasegun Osidipe, said 196 manufacturing companies shut down their operations between 2015 and 2017 due to the biting recession.”
Here is the unenviable list: Berec Batteries; Exide Batteries; Okin Biscuits; Osogbo Steel Rolling Mills; Nigeria Sugar Company; Bacita; Tate and Lyle Sugar Company; Matches Manufacturing Company, Ilorin; Nigeria Paper Mill Limited located in Jebba, Kwara State; Nigerian Newsprint Manufacturing Company Limited, Oku-Iboku, Akwa Ibom State; and the Nigerian National Paper Manufacturing Company Limited in Ogun State.
Go through Nigerian roads, you will count a rainbow coalition of different cars, manufactured by different countries and imported into Nigeria. That is to the detriment of the Nigerian’s automobile assembly plants that have, over the years, closed down. These are Peugeot Automobile Nigeria Limited, Kaduna, set up in 1975; Volkswagen of Nigeria Limited, Lagos, established in 1978; Anambra Motor Manufacturing Limited, Emene, Enugu, set up in 1980; Steyr Nigeria Limited Bauchi; National Truck Manufacturers, Kano; Fiat Production; and Leyland Nigeria Limited Ibadan.
The textiles sector is among the worst hit! Babalobi listed them: Afprint Nigeria Plc; President Industries Nigeria Ltd; Aswani Industries Nigeria Limited; Nigerian Synthetic Fabrics Limited; and First Spinner Pls all in Lagos State. Others are United Nigeria Textile Limited; Arewa Textiles; Kaduna Textile Limited; Unitex Limited; Supertex Limited all in Kaduna State; Kano Textile Printers Limited; Asaba Textiles Mills; Aba Textile Mills Limited, Aba; Edo Textiles Mills Limited Benin, and Odua Textile Industries Limited, Ado Ekiti. Thirty-eight major textile companies, according to the Nigerian Textile Manufacturers’ Association, closed down business in Nigeria between 1999 and 2009. He attributed this to the “liberalisation policy that opened Nigerian borders to cheaper textiles from China, coupled with smuggling of foreign textiles killed the once vibrant and thriving textile industry.”
Thirty-eight major textile companies closed down business in Nigeria between 1999 and 2009, according to the Nigerian Textile Manufacturers’ Association. These firms include Afprint Nigeria Plc; President Industries Nigeria Ltd; Aswani Industries Nigeria Limited; Nigerian Synthetic Fabrics Limited; and First Spinner Pls all in Lagos State. Others are United Nigeria Textile Limited; Arewa Textiles; Kaduna Textile Limited; Unitex Limited; Supertex Limited all in Kaduna State; Kano Textile Printers Limited; Asaba Textiles Mills; Aba Textile Mills Limited, Aba; Edo Textiles Mills Limited Benin, and Odua Textile Industries Limited, Ado Ekiti. In 2018, the Kano branch of the MAN reported that 232 manufacturing plants out of the 338 existing in Sharada/Challawa and Bompai Industrial estates, in Kano City closed down between 1994 and 2018. Factory workers became jobless and swelled the army of those Satan could hire for his workshop, especially so in a city that is notorious for pious mayhem!
No country will willingly allow its industries to go down. Many factors lead to this: unstable energy supply, insecurity, kidnappings, insurgency, ports congestion, poor railways infrastructure, high cost of forex, multiple tax regime, and others.
Now that 2023 is inching closer and many presidential candidates -who wish to be elected into positions where they will be able to determine who gets what, when and how – have signified interest, it is necessary to look at what each promises to offer. These should be one of the concerns, not attacks on individuals.
Nigeria hopes to ape China which has 3000 special economic zones. Though Nigeria may not achieve that number, there is a process in place. Professor Adesoji Adesugba, the Managing Director of Nigeria Export Processing Zones Authority (NEPZA) revealed this during the defence of the 2021 Budget and the presentation of that of 2022 before the House Committee on Commerce and Senate Committee on Trade, Industry and Investment on November 3 and November 10 last year.
In his words: “Infrastructure development in the zones is the ultimate attraction to this concept. We shall not be dissipating too much energy in promoting the concept if the right infrastructures are in place.
“China has about 3000 state-of-the-art free trade zones and has leveraged them to transform its economy to an enviable form. This is indicative of the socio-economic possibilities embedded in this global concept. We need to, therefore, rethink our strategies to improve appropriation and funding of the free trade zones if the country truly aims at using them to accelerate economic growth. We have to develop a formidable special economic zone structure that can stand the test of time. What is, therefore, required is the political will to substantially enhance its funding.
If we failed to do this, the country will finally become a dumping ground for goods and services from other African countries due to the current trade liberalisation mechanism allowed by the African Continental Free Trade Agreement (AFCTA). Nigeria must become competitive by being a producing nation as opposed to being a consuming nation.”
At a time when banks like to lend money to importers of containers of manufactured goods from abroad at double digits, they would not touch Nigerian manufacturers with a one-kilometre pole, whoever becomes President should expand the availability of development finance to support manufacturing. In their essay, Development Finance: Filling Today’s Funding Gap, published on July 31, 2018, on www.brookings.edu, George Ingram and Robert A. Mosbacher, Jr wrote that in recent years, development finance has emerged as an increasingly important tool to fight global poverty and reduce income inequality. “In many cases, it has become an important complement to ODA and integral to achieving the SDGs. Whereas the Millennium Development Goals (MDGs) were focused on increasing donor assistance to developing countries, the SDGs include a comprehensive set of objectives for every country and emphasize all forms of finance, particularly from the private sector. Agenda 2030 recognizes that the private sector is not only a source of capital, but also a source of jobs, innovation, technology, knowledge, and practical experience.”
In the area of Investment Climate, a new President should be committed to ensuring that everyone doing business in Nigeria, from multinationals, large corporations and established businesses to tech start-ups, and small businesses, can do so seamlessly and with ease.
Therefore, the new President should intensify and expand existing reform efforts to ensure that the regulatory compliance by businesses is cost-effective, speedy and less cumbersome; digitize the application processes of business regulatory agencies for greater efficiency; expand the pool of available judges by appointing more judges to clear backlog cases and boosting the remuneration and benefits of judicial officers and staff;
Security is another factor in attracting global investment capital. Investors will not like to come to a country where they may end up in the kidnappers’ dens. Thus, the new President should enact a modern and relevant security architecture and framework that prioritises and addresses Nigeria’s current security realities. The Nigerian landscape from Sokoto to Lake Chad; the Gulf of Guinea to the Lagos Lagoon side; and even the “Y” shaped troughs of Rivers Niger and Benue which empty into the sea in a dendritic pattern, can be monitored by drones and coordinated from a situation room, manned by personnel of the Nigerian armed forces. With that, there will be no hiding place for terrorists, bandits and other criminals.