Nigeria is blessed with abundant raw materials, yet its economic growth is not encouraging. A recent report showed that poor utilisation of its local raw materials is a contributing factor. CHINYERE AMALU writes.
Over dependence on the imported raw material and as well as its high utilization in the nation’s manufacturing sectors, has no doubt crumbled the utilisation of local raw materials available in Nigeria, thus, hindering its industrial growths.
It is globally recognised, that the industrialisation of any nation and its economic growth depends largely on the development and utilisation of its local raw materials, but this also depends on the availability of local intermediate raw materials production industries and industrial infrastructure.
Unfortunately, in Nigeria, with its abundance raw materials and natural resources, the nation’s manufacturing sector is still lagging behind in growth, as a result of low utilisation of the available raw materials in the country.
The Raw Materials Research and Development Council (RMRDC) is the agency under the ministry of science and technology, saddled with the responsibility of reviewing from time to time the availability of raw materials in the country, with the view of advising the federal government on the strategic implication of depletion, conservation and stockpiling of such resources, but how well does this information help in improving the productivity of manufacturing sector in the country.
“This is what we do every two years, and the purpose of the industrial study was to provide information on locally available materials, process technology, raw materials requirements and capacity utilisation of the manufacturing industries with a view to making the information available to manufactures and prospective investors,” said the director-general of RMRDC, Prof. Peter Onwual, who also noted that despite the information, low utilisation of these materials continued to exist.
For instance, from the report of ten technical committees inaugurated in 2009 by the council on the ten sectors of the Manufacturing Association of Nigeria (MAN), to update the list of existing industries, their perspective installed capacities and current capacity utilisation of each sector and as well as analyse the available local raw materials that could be developed for the sub-sectors among others, there are staggering data on the percentage of low utilisation of these raw materials.
The report which was gotten from the ten areas, including Base Metal, Iron and Steel and Engineering Services, Chemical and Pharmaceuticals, Domestic and Industrial Plastic, Rubber and Foam, Food, Beverage and Tobacco, Non-metallic Minerals, Pulp and Paper, Paper Products, Printing and Publishing, Textile, Wearing Apparel, Leather and Leather Products, Wood and Wood Products and Motor Vehicles and Miscellaneous, showed that in pulp paper sector, the capacity utilization between 2006 and 2009 was just four percent.
Revenue loss for non-production in the pulp sector within the period under review was given as N30.25 billion for industrial paper, N75 billion for news print and N48 billion for bond paper. During this period, Wood and Wood Products sector also recorded low capacity utilization. 26.5 percent was recorded in the Saw Mill sub-sector, 15 percent in Ply Mill, 14 percent in Particle Board, 10 percent in wooden door and 6 percent in Match sub-sector. Total production of cement in 2009 was 8 million tonnes, that is 59 percent capacity utilsation, while the actual consumption for the same period was estimated to be 12 million tonnes.
The report also showed that Motor Vehicle and Miscellaneous sector did not fare well during the period. For instance, the capacity utilsation for the sub-sector was given as 10 percent for vehicle manufacturers/assemblers, over 50 percent for motorcycle and bicycle manufacturers and 30 percent for component manufactures. The Base Metal, Iron and Steel sector also operated at a low capacity of 10-60 percent during this period. In Plastic sub-sector, only one company is producing resin in the country which resulted in the short supply of the commodity although the company according to the report is currently producing at 100 percent capacity.
The capacity utilisation in the Foam sub-sector, the report added is 65 percent, 60 percent for plastics sub-sector and 23 percent for rubber sub-sector. Annual dry rubber production stands at 45,000 million tonnes but only 20 percent is utilized locally due to the closure of two tyre factories in the country.
From the above figures, it is obvious that there is low utilization of these raw materials available in the sector, but what could be responsible for this? Stakeholders in the sectors attributed this poor performance to unfair competition from imported products, which according to them discourages sales, infrastructure challenges, including electricity, transportation, industrial fuel and security.
Prof. Peter Onwualu, the director-general of the council, who stressed that one of the major sector facing the country’s development is lack of data, added “that lack of favaourable long term funding mechanisms and over dependence on foreign capital goods such as industrial machinery, high skilled manpower, basic engineering infrastructure (iron and steel) “are the major factors contributing to low utilization of these raw materials.
Also, Prof. Samuel Enibe, from the department of mechanical engineering, university of Nigeria Nsukka (UNN), and a member of the technical committee on Base Metal and Engineering Services, identified low level of Research and Development (R&D) and lack of funding as the major contributors of low utilization of local raw material by the manufacturing sector in Nigeria.
Mr. Joseph Onu, from the private sector, told LEADERSHIP that Nigerians do not have value and regard for the abundance local raw materials in the country. “So this is part of our problem, if we value what we have we will develop it.”
For the nation’s manufacturing sectors to grow to the expected height, the stakeholders were of the opinion that this sector be empowered by adequately funding it and reviving the local industries that have packed up due to lack of maintenance, patronize and support from the government and the private sectors.
Prof. Onwualu is of the opinion that government should consider a stimulus package to encourage long term investments in import substitution in industries and setting up industries for adding value to the nation’s natural resources and convert them to intermediate raw materials.
“This has the potential of saving over N250 billion annually and creating over 5 million industry related jobs,” he said.
According to Prof. Enibe, government should intensify what it is currently doing in the power sector as many of the industries could not operate at the required capacity because of power supply problem.
“I will recommend that the power supply is improved drastically everywhere. When that is done, many industries that have folded will be revived and those that is operating can increase their capacity,” he stated.
He also advised that the various raw materials available in the country should be put into use, adding that it will enable the masses benefit a lot and facilitate the actualization of Vision 20: 2020.
If the information from the report of the technical committees on these ten sectors are to be reckoned with, then both the federal government and the private sectors should act fast and put the necessary structures in place to revive these sectors and make them useful for the masses and for the industrial growth of this country.