It’s Time for A “Local is Better” Campaign

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nnankes-takeIn the past 6 months I have at different fora had the privilege of being with Mr. Olusegun Aganga, the honourable Minister for Industry, Trade and Investment. One occasion was at the Kenyan/Nigerian Joint Commission at the Aso Villa and twice at the factories of two different manufacturing clients that I consult for in Ota, Ogun state and Oregun, Lagos state where he came to inspect their facilities. The honorouble minister has at each event struck me as a man who is passionate about lifting Nigeria’s productive sector. He gives the right body language, asks deep and incisive questions and gives appropriate gestures while he leaves his hosts with assurances of support. You do not encounter Mr. Olusegun Aganga and not feel inspired with hope and reassurance. From my close encounter with him, one could say if there was a perfect fit in the Goodluck Ebele Jonathan’s cabinet; Mr. Aganga would eminently qualify as one.

The problem however is that a good number of the issues which some of the manufacturing companies raised that are critical to not just their success but their very survival have not been adequately addressed. Mind you, as a stakeholder in the Nigerian economy I am not unaware that these problems have been voiced in the media by many other operators in the manufacturing sector in the past. I will not also pretend that I do not know that resolving some of these knotty issues are not entirely within the purview of Mr. Aganga. The Presidency, the ministries of finance, national planning and relevant agencies play key roles but then it should not take forever to sort out some of these issues.

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For instance, I find it difficult to understand why despite the many gains the government has made to vastly improve the agricultural sector and exponentially boost our yield, we are not taking appropriate steps by enunciating and executing Nigeria-centric policies to ensure that our food and cash crop farmers enjoy adequate patronage from local industries and multinational companies with factories in Nigeria. A recent meeting with a senior official of the Raw Materials Research and Development Council, an agency in the Federal Ministry of Science and Technology, revealed the frustrations of the agency as he claimed that when they try to cajole or compel some local and multinational companies to source readily available (and most times better) local alternatives for their raw materials, a call to some top official in government by the company’s executives frustrates their effort.

It was for this reason that the council introduced in 2012 the Nigerian Raw Materials Exposition aka NIRAM Expo. The 2nd edition comes up between the 28th and 30th of October in Lagos. The relevant authorities will do well to make attendance compulsory for all manufacturers who import processed and semi-processed raw materials. Manufacturers who despite being aware of the availability of local raw materials for their products should simply be penalized by being made to pay a higher import tariff or levy.

Another nagging issue is the problem of tariff and levy application to the importation of semi-processed and fully processed goods. I am aware that government has realised that individual preferential tariff rebate has hurt the economy in the past and now instead, finally resorted to sectoral reviews of tariffs since cost input is one of the greatest challenges to manufacturing companies. However, there should be a graduated tariff structure for imported semi-processed, fully-processed and fully packaged products. This tariff issue must be done in a dynamic manner as international trade dynamics could change very quickly. The whole idea is to encourage value addition by a large percentage while discouraging excessive and unbridled importation and dumping of finished goods. The ultimate aim will be to eventually get more Nigerians to consume more goods fully or partially produced in Nigeria.

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It is clear that if policy makers and regulators enforce strict compliance it would in the long run be to the benefit of the Nigerian economy by way of greater employment opportunities, a robust manufacturing sector, collateral business opportunities for service providers and an enhanced GDP. Then we can produce not only for our own consumption but for exports as well. Only recently the President of the Abia Think Tank Association, Mazi Sam Ohuabunwa was reported as saying that made-in-Aba shoes have reached a daily exports volumr of one million pairs per day. One can only imagine the level of foreign exchange we can make and save if our industries fully utilize our ideas, talents, skills and raw materials.

Thirdly and very importantly, the Minister for Industry, Trade and Investment must quickly ameliorate the immense difficulties of Nigerian companies and traders making exports to other countries. As it stands tariff, shipping charges and custom duties give the rather queer impression that the system is out for frustrate Nigerians from genuine exports as it is so much easier and cheaper to import goods into Nigeria than to export.

I recommend that a “Local is Better” campaign be launched immediately not only in manufacturing but in all facets of our economy. I am not advocating for a closed economy as competition is necessary to make our local players’ products and services globally competitive. But we need to leverage competitive advantage for our benefit. We are blessed with fantastic arable land, minerals, talents, hard working people and a huge market. We need to use what we have to get what we need.

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No Industry can grow without long-term, low-interest financing. Apart from the laudable effort by the Bank of Industry and NEXIM Bank, I recommend that commercial banks must dedicate about 5% of their loans portfolio annually to start-up SME manufacturing companies. The reason this is so important is that we need to revert to being a productive economy like we used to be rather than the import economy we are today. SMEs and their larger cousins are engine room of any economy. The manufacturing sector will catalyse economic activities in so many areas. These include, farming, storage, haulage, distribution, merchandising, advertising, banking, legal and insurance services and so much more. With a “Local is Better” Nigeria go surely better.