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Issues In The News

Jonathan and Nigerian Manufacturers

By Yemi Adebowale – THISDAY
These days, whenever President Jonathan’s name is mentioned, what follows more often than not, is politics and his political challenges. All over the country, the talk is always about politics. There is so much politics in everything we do and say resulting in only very few people noticing the silent revolution going on in the industrial sector (the real sector) courtesy of the Jonathan administration. Manufacturers in the country have never had it so good under previous administrations in this country. The last three years have been eventful for members of this real sector of our economy.

The Jonathan administration has realized and practically showed that if we are going to diversify our economy, then the industrial sector must play a leading role. That if our dear country is going to move from a poor nation to a rich one, we must have a strong and vibrant industrial sector. As a result, his administration has been implementing policies to strategically position and empower the nation’s manufacturing sector as the key driver of economic growth and to ultimately increase the productivity of the manufacturing sector.

Unfortunately, only few people are seeing this. The press seems only interested in politics. Unlike previous administration, the Jonathan administration has been responding better to the cry for help from manufacturers with policies and financial bailouts rolling in, to the rescue of several dying companies. His administration has been focusing on value addition and investment in the real sector of the economy to create jobs for Nigerians.

Indeed, this is the first time a government will fulfill virtually every commitment made to the manufacturing sector, resulting in massive improvement in industrial capacity utilization. Figures from the Manufacturers Association of Nigeria show that between the Obasanjo and Yar’Adua administration, industrial capacity utilization dropped to about 39 per cent. In the last three years, capacity utilization has increased to about 49 per cent.

Now, let us go to real facts and figures about the positive things happening to our manufacturers in the last three years under the Jonathan administration. There was a N100 billion Textile Industry Resuscitation Fund, announced by the Obasanjo administration about 13 years ago. He never implemented it until he left office.

So, about 200 textile mills across the nation remained in coma until the Jonathan administration emerged in 2010 and ensured that the money was released in 2012. The release of the fund has been fully implemented through the bank of industry, BOI. Many of the textile mills in Kaduna, Kano and Lagos have roared back to life, creating new jobs for thousands of Nigerians. Several others are getting set to resume production. Suddenly, the future for the textile industry is again looking good.

There is the Export Expansion Grant (EEG) introduced by the Obasanjo administration to encourage manufacturing for export. Obasanjo suspended the fund just after he initiated it. His reason was that it was being abused. Stakeholders advised him not to throw away the baby with the bath water. They urged him to fish out the bad eggs and exclude them from the grant. But he just suspended it and no EEG was granted to manufacturers till the end of the Obasanjo administration in 2007. Jonathan has revived the grant and has been handing it to exporters although it now takes some time to get to operators due to the painstaking compilation process to prevent fraud. So many manufacturers are now encouraged to produce for the export market, thus earning foreign exchange for the country. Nigerian manufactured goods are now all over the west coast and beyond, thanks to the EEG.
Manufacturers have increased production; more jobs are being created for our youths on a daily basis.

A N200 billion Commercial Agriculture Credit Scheme (CACS) was introduced by the Yar’Adua administration but was hardly implemented. The Jonathan administration has now fully implemented it, helping hundreds of farmers to set up agro-allied industries. A N10 billion rice processing fund was introduced by the Obasanjo administration in 2002 but never implemented. This administration has also fully implemented this. A couple of rice mills have taken off across the country after benefiting from this fund. Many others are getting set to join after benefitting from the rice fund.

The Jonathan administration has also fully implemented an Industrial Sector Refinancing Fund which helps manufactures whose businesses are dying due to expensive debts owed to commercial banks. The fund is used to re-finance the debt while the manufacturer can concentrate on production while enjoying a longer repayment period at single digit interest rate.
The country is already reaping the benefits of these industrial incentives through job creation and increased contribution to Gross Domestic Product by the manufacturing sector.

The real sector of the Nigerian economy is also bogged down by power problems. It has been the most debilitating of all the challenges manufacturers have had to deal with in the last thirteen years or so, with a good number of them paying the ultimate price and shutting down production permanently. Some manufacturers are now taking advantage of the power reform agenda of the Jonathan administration to set up power plants for their use, with funds provided by the Bank of Industry. Jonathan’s administration has also been able to bring to a logical conclusion the deregulation of the power sector. Previous administration could not do this due to lack of political will. Private sector players have now taken over power generation and distribution across the nation. This is expected to start impacting on manufacturing in a couple of months with increase and reliable power supply.

Virtually all tax concessions promised manufacturers by previous regimes but were never implemented are now being enjoyed under the Jonathan administration. New manufacturers now enjoy “pioneer status”, which is a concession to pioneer companies located in economically disadvantaged areas. They enjoy a tax holiday period of five to seven years. Manufacturers involved in local raw material development; local value added; labour-intensive processing; export oriented activities; in-plant training also enjoy additional concessions.

In some cases, the Jonathan administration had to physically and directly intervene to rescue the manufacturing sector. A good example here is the revival of moribund leather tanneries across the country. The government first carried out an audit of all moribund tanneries with a view to re-tooling and reviving viable ones.  Before Jonathan, of all the 36 tanneries in the country, only six were active and accounted for the bulk of our leather export. Using the Small and Medium Enterprises Development Agency of Nigeria, government worked with the owners to re-tool and revive many within two years.

Government also identified clusters in the six zones in Nigeria, which are being upgraded to world-class leather clusters. They include locations in Kano, Kaduna and Aba, among others. The Kano leather cluster is already one of the most important in West Africa and sources lots of hides and skin from outside Nigeria to meet its demand. It is also providing jobs for hundreds of youth in the area. This is the first administration that would be providing the requisite infrastructure to support the growth and development of the leather clusters across the country.

The leather clusters are already generating good foreign exchange for the country and creating jobs. An elated Olusegun Aganga, Minister of Trade and investment remarked recently on this achievement: “We have developed the Nigeria Industrial Revolution Plan through which we aim to increase the Nigerian manufacturing sector’s revenue by US$20 billion over the next five years. Under the NIRP, leather and leather products fit within the strategic sectors under the agro allied and agro processing group. Our target is to double revenue from tanneries and leather-related manufacturing within the next 3 years.

“In line with the Transformation Agenda of Mr. President, I want to assure stakeholders in the leather sub-sector of the Federal Government’s commitment to reducing their cost of doing business in order to make leather manufacturing both locally and globally competitive. This is because the leather sub-sector is strategic to inclusive economic growth and development.”

Also, the Jonathan administration, through the Bank of Industry’s counterpart funding programme with 17 state governments, has generated a funding pool of N9 billion for micro, small and medium enterprises across the country as part of the implementation of the National Enterprises Development Programme. Many manufacturers are already accessing the fund.

The rigorous implementation of the country’s backward integration policy in the cement industry by the Jonathan administration has resulted in increased local production and more jobs for more Nigeria. For the first time in 2002, no single license was issued for cement importation. Nigeria now looks set to become a major exporter of cement.

Nigeria now has capacity for about 28 million tons of cement, which provides direct and indirect employment for about 2 million people. This increase in local production has been able to save the country about N210 billion in foreign exchange of per year.

This country is now a shining example globally in terms of success story in cement production. Indeed, this is the first government in a very long time that will accept the private sector as the engine of growth and the creator of wealth, while providing the enabling environment for them to operate. It is the first in a long time providing an enabling environment that is conducive to the growth and development of manufacturing. In this regard, laws which had hitherto hindered private sector investments have been either amended or repealed.

About TransformationWatch

TransformationWatch is an online news site founded by Henry Omoregie It is focused on keeping tabs on the Transformation Agenda set out by the Nigerian leadership in the Local, State and Federal Governments. My mission is to observe, analyze and report milestones or slowdowns in promised service delivery in all the facets of governance in Nigeria (2011 and beyond). Readership is open to all Nigerians and friends of Nigeria alike, regardless of Tribe, Religion or Political divide. We are all in this together

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