Policy implementation crucial in tackling smuggling, trade malpractices – MAN President

Engr. Mansur Ahmed is the President of Manufacturers Association Of Nigeria (MAN) in this interview, he speaks about the need to implement anti-smuggling laws, review the interest rates and introduce conditions that make investment worthwhile in Nigeria. JOY OBAKEYE writes…

As MAN President, what policies do you consider paramount to catalyze industrial growth?

First, we must consider what policies will make this vision feasible. When you are manufacturing, the first step is making an investment, so you want to look at the conditions that will make those investments worthwhile.

The investment climate is key, and I think we all know this over the years.

This Government has been working on improving the business environment as there have been several initiatives to improve the investments climate and thereby making investments and businesses easier for investors.

The second is policies governing the development of infrastructure because as manufacturers depend on basic infrastructures such as electricity, water, transportation etc. the poorer the infrastructure, the higher the cost at which they can produce and deliver products to the market.

So, building infrastructure is one of the most critical responsibilities of the Government for industries as a whole to be more competitive.

The third is improving the spending power of the ordinary people because of the higher the spending power, the more demand for products.

So, putting more money in the pocket of the ordinary Nigerian clearly creates more market for the manufacturers. Policies that help improve the income of the ordinary person is very important.

The fourth is policy against trade malpractices, such practices undermine the market and part of our major task is to ensure that the Government continues to make laws and regulations that discourage these practices particularly smuggling, counterfeiting, dumping.

There is also the issue of finance. One major constraint of the manufacturing sector in Nigeria is that the cost of financing which is very high.

For instance, if you borrow funds to invest at a 20 per cent interest rate, you must make more than 20 per cent for that investment to yield benefit.

In other countries, it is less than 10 per cent interest rate for investments, this means that you will have a problem competing with manufacturers from those countries.

Cost of financing is very important and we must continue to work with Government to encourage the financial systems to continue to bring down cost of finance.

Again, given our current status in the manufacturing sector where a huge amount of manufacturing resources is spent importing inputs such as raw materials, spare parts, components, machinery etc, another area that is important to the manufacturing sector is the Foreign Exchange not only in terms of rate but whether it is steady or fluctuating.

As much as possible we want a competitive foreign exchange rate and also to remain reasonably stable, if it fluctuates it makes it difficult for you to plan your operations.

Manufacturers have constantly clamoured for a strong campaign against smuggling, counterfeiting, cloning and piracy which bedevils their businesses, what strategies would you recommend to Government to curb the menace?

We are already engaging the government on this; there are initiatives that have started under President Buhari’s administration tries to focus on taking necessary measures to discourage all these malpractices.

I think that one thing is having the regulations and policies; the other is making sure that people who are engaging in these things are identified and dealt with according to the law.

Therefore, the implementation of the regulation is key. We have been pushing and working with the key regulators that are involved in ending these malpractices such as the Customs Services, NAFDAC, SON, and will continue to work with all these regulatory agencies to ensure that the regulations put in place are effectively implemented.

I also believe that we have our own responsibility as manufacturers, our members ought to know that you can’t eat your cake and have it so we must ensure that we don’t get involved in these malpractices.

Secondly, we must also, be watchful because we are out there in the market and so we know what comes into the market and what goes on and we must, therefore, help the government by ensuring that when we see these malpractices taking place we don’t just fold our hands and say this is not our responsibility,

we must take steps to make sure that the culprits are identified and arrested, therefore we must work hand in hand with the Government to curb this menace.

The cost of funds and lack of long-term loan affect manufacturers, particularly the Small and Medium Scale Industries (SMI), how do you hope to address this yearning?

The Small and Medium-scale Industries (SMIs) are very critical to the growth of the manufacturing sector because the more successful they are, the more the larger industries can rely on them to do a lot of the things that they themselves have to do.

This way the value chain will be stronger and will help both the larger and the smaller industries. We will continue to advocate for initiatives that will put more funds in the hands of the Small and Medium industries at a lower cost or lower interest rate and on a longer-term basis because investments in manufacturing are on a long-term basis.

So long term funding is important. It is indeed lack of long-term funding that also tends to keep our industries small and at tertiary levels.

What is your scorecard of the current administration with respect to the manufacturing sector?

The manufacturing sector has been fragile for quite some time, so you really can’t blame this administration which has just been in power for three years.

The overall economy has been affected by factors which are way beyond this government. The crash of oil price in the international market has tremendously impacted negatively on the economy that its effect spread across every sector particularly the manufacturing sector.

I believe that government has tried to some extent to alleviate some of the pains we suffer, such as by creating special windows for manufacturers for FOREX, setting up of the Presidential Enabling Business Environment Council (PEBEC), and the Industrial Council to monitor what is happening to manufacture as well as other sectors and recommend what needs to be done to ensure there is improvement.

You are aware that as a result of the collapse of the oil price we went into a recession, and although we are out of that recession things are still fragile, the manufacturing sector is still up and down.

But we are beginning to see at least in terms of current government decisions possibilities that can help the manufacturing sector to grow but the execution of these policies is very important.

As stakeholders, we will continue to monitor this and raise alarm if need be, when things are not being executed when they should.

I believe that the position, in a nutshell, is that yes, the sector is too fragile, and a lot more needs to be done to strengthen it and sustain its growth trajectory.

How do you hope to promote the friendlier business environment for manufacturers?

Well, we need to ensure that policies are in a place that will help to create a friendlier and conducive business environment.

We need to work with the government to ensure that continued investment in infrastructure is being made in order to reduce the cost of doing business and improve the productivity of the businesses themselves.

We need to work with the government to ensure that the overall business environment is being monitored in a way that we don’t fall back into recession.

More concerted effort being made to strengthen agriculture so that we diversify the economy away from oil.

Given your wealth of experience and vast exposure in the manufacturing sector, what should member-companies look out for in your administration?

My vision is to “increase the contribution of the manufacturing sector to the National Economy”.

Today, as you are aware the manufacturing sector is contributing less than 9 per cent of the Nation’s Gross Domestic Products (GDP) that is not good enough.

In countries that are even less developed than Nigeria, we have seen higher rates of contribution by the manufacturing sector and at any rate, for any country to be regarded as industrialized, the manufacturing sector is the productive sector that produces the goods that generate value and wealth, must be contributing significantly to the growth of the economy.

For instance, in many of our peer countries; Malaysia, Indonesia, Brazil, South Africa, you see manufacturing sector contributing something in the range of 30% of their countries GDP, now here we are contributing less than 9 per cent. So clearly, we have a long way to go to raise the level of contribution of the sector to the GDP.

Part of the contribution comes from, not only the scope or depths of the sector, but also from the operational efficiency of the productivity i.e. the capacity utilization.

Consequently, we need to make sure that we eliminate those things that on a day to day basis tend to impede the operations of members and therefore reduce their capacity utilization.

Therefore, under my administration, members should expect an expansion of the sectors i.e. bringing more manufacturers into the fold and ensuring that sectoral groups are made vibrant.

We have about ten sectoral groups, but if you look at the relative contributions you will observe that not more than 4 or 5 sectoral groups are responsible for most of the contribution of the manufacturing sector to the economy and for most of the employment as well.

The textile sector used to be very vibrant, but it has declined significantly. So, we must broaden the sector to ensure that sectors that are not adequately functioning are restored to good health.

In leather and footwear there is tremendous capacity but today it is not being fully exploited, we are stopping at the production of wet leather.

Value addition is the key to success in manufacturing, for instance, if you take the process from hiding to finished leather and compare the value that is added from that finished leather to a pair of women’s handbags, the difference is huge.

Hence, there is a need to deepen the sectors. The same scenario is applicable to food processing; you produce cocoa, turn it into cocoa butter and you export it, what you get from that cocoa butter and they convert it into chocolates, for the same quantity of cocoa butter the manufacturers of chocolate will make literally a thousand times more than you do.

One of my goals is to work with the National Council and Government to ensure that we continue to grow the manufacturing sector both in depths and scope through an increase in value addition and thereby better the contribution of the manufacturing sector to the Nation’s GDP.

There is also, the need to constantly improve on the technology of our manufacturers particularly today with growth in technology.