There is a renewed call by the federal government for local manufacturers to increase local raw materials inputs in their production to boost local content capacity in the country. OLAJIDE FABAMISE reports
It is no longer news that the administration of President Muhammadu Buhari, has resolved to pursue aggressively the use of local raw materials as part of its diversification agenda to realise a resource-based manufacturing industry in the country. The reason for the local capacity move is not far-fetched, as Nigeria for decades has been an import dependent country relying hugely on imports of its industrial products. Regrettably, the over dependent on foreign raw materials in the country’s manufacturing sector has resulted in dearth of capacity utilisation in the industry, and this has been adjudged as one of the key reasons there has been backwardness in the country’s manufacturing sector.
The situation has inhibited the acceleration of the country’s resource-based industrialisation programme adopted by the federal government through deliberate funding and creation of an enabling environment.
Thus, the only way to overcome this menace is to ensure that industries stick to usage of local raw materials and inputs for manufacturing of their products. No doubt, the failure to boost capacity utilisation in the industry has continued to cause recurrent challenges in the economy such as unavailability and high cost of investible funds, poor electricity supply from the national grid as well as poor transportation infrastructure across the country. For industry experts, these challenges are the real reasons for not being able to maintain sizeable capacity utilisation, which makes planning difficult for manufacturing firms. Notwithstanding, it has also led to Nigerian products not being competitive in neighbouring countries, which makes the manufacturers lose grip of their markets and profit takings. In 2015, the management of the Central Bank of Nigeria (CBN) introduced a ban on 41 items in a bid to restore local capacity utilisation. It compelled manufacturing firms to increase usage of local source in their production output. The apex bank issued a directive banning 41 goods and services from the list of items valid for foreign exchange from the CBN dollar window.
In his submission, CBN governor, Godwin Emefiele, argued that most of those items such as rice, cement, margarine, palm kernel, palm oil products, vegetable oils, meat and processed meat products, vegetables and processed vegetable products, among others, could be sourced locally, if the country sets its mind to it. For the Raw Materials Research and Management Council (RMRDC), the quest to constructively develop the country’s local raw materials inputs was behind the objective of the federal government is setting up the council in 2012.
In view of the fact that most raw materials and resource-based manufacturing industries fall within the micro, small and medium scale category, it behooves the RMRDC to focus national attention on the challenges of resource-based MSMEs. The Minister of Industry, Trade and Investment, Dr Okechukwu Enelamah,who spoke with LEADERSHIP recently in Lagos at a public lecture organised by Commerce and Industry Correspondents Association of Nigeria (CICAN), urged indigenous industrialists to use more local raw materials and input in their production.
According to him, such a step would strengthen efforts toward national development and advance the scope of research and development in the country. Enelamah noted that the government would accelerate its attention through appropriate policy on raw materials for conceptualisation and implementation, stressing that the purpose of focusing on development of local substitutes was to reduce industrial raw materials and inputs that were presently being imported. The minister said that the country would be at the threshold of scientific and technological breakthrough in not-too-distant future with the involvement of state governments and practical implementation of science, technology and innovation policy. He commended the minister of science and technology, Dr Ogbonnaya Onu, for his charisma in influencing the ministry’s drive toward national development.
No doubt, the more use of locally sourced raw materials and inputs in Nigeria’s industrial sector will fast-track an all-inclusive resourced-based industrial economy, including more foreign exchange earnings for Nigeria. Mr Segun Ajayi-Kadir, director-general, Manufacturers Association of Nigeria (MAN) said the federal government’s policy on ease of doing business has boosted the confidence of manufacturers in the economy.
“The ease of doing business policy has helped to solve the problem of the operating environment; it has also helped to reduce the cost of manufacturing. “It has also given hope to would-be investors in the economy. The south-west is mainly agricultural base, the potentialities are there in terms of local sourcing of raw materials, and new companies are being set up so that they can source raw materials from our region,” he said. Also speaking recently at the Nigeria Brewery Golden Pen Award, the managing director of Nigerian Breweries Plc, Mr. Jordi Borut Bel, said the emphasis on agriculture, local sourcing and industrial development was not only in tandem with the current push for economic recovery in the country, but also key to making it achieve her full potential to become a self-reliant nation. Also speaking, Dr Reuben Abati, stated that the diversification of Nigeria’s economy has remained a topical agenda, urged stakeholders to support the efforts to domesticate the Nigerian economy on how to grow agriculture and local industry.