Nigeria: Manufacturers target value addition to boost contribution to GDP

WorldStage Newsonline– Manufacturers Association of Nigeria (MAN) has announced plans to increase the sector’s contribution to the country’s Gross Domestic Product (GDP) through value addition.

Addressing journalists on Thursday in Lagos, Mr Mansur Ahmed, President, MAN said that the manufacturing sector was not contributing significantly to the growth of the economy.

He said, “As you are aware the manufacturing sector is contributing less than 9 per cent of the nation’s GDP, which is not good enough.

“In countries that are even less developed than Nigeria, we have seen higher rates of contribution by the manufacturing sector.

“For instance, in many of our peer countries; Malaysia, Indonesia, Brazil, South Africa, the manufacturing sector have been seen to contribute something in the range of 30 per cent to their countries’ GDP, meanwhile, 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 which comes from not only scope or depth but from 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,”.

The MAN president promised to expand of the manufacturing sector by bringing more manufacturers into the fold and ensuring that sectoral groups were made vibrant.

“We have about 10 sectoral groups, but if you look at the relative contributions you will observe that not more than four or five sectoral groups are responsible for most of the contributions of the manufacturing sector to the economy and for most of the employment as well,” Ahmed said.

He decried the decline of the textile sector, adding that efforts to broaden the sector and ensure that other sectors not adequately functioning were restored to good shape.

He said that the tremendous capacity of the leather and footwear sector was not being fully exploited due to the lack of value addition.

“Value addition is the key to success in manufacturing; for instance, if you take the process from hide 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.

“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, they convert into chocolates, for the same quantity of cocoa butter, the manufacturers of chocolate will make literally a thousand times more than you do.

“Hence, there is need to deepen the sectors,” he said.

The MAN Chief also reiterated the need to constantly improve on the technology of manufacturers, particularly with growth and evolution of technology.

“It is not enough to have a factory you must also watch what technology is doing to that factory.‘If you do not update your technology very soon your processes will become obsolete and therefore your products will not be competitive,” he said.

The MAN boss noted that manufacturers depended on basic infrastructure such as electricity, water, transportation and urged government to continue to invest massively in infrastructure for rapid industrialisation.

“It is known that 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.

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

“So, putting more money in the pocket of ordinary Nigerian clearly creates more market for the manufacturers,” he said.

He said that MAN would continue to engage the government to make laws and regulations that discourage trade malpractices, particularly smuggling, counterfeiting, dumping.Ahmed urged government to lower lending rates and make foreign exchange rate stable and competitive for manufacturers.

“For instance, if you borrow funds to invest at 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 problem competing with manufacturers from those countries.

“Also of importance to the manufacturing sector is the foreign exchange not only in terms of rate but of stability.

“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,” he said. 

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