Ikpong Umoh is the Vice Chairman, Toiletries and Cosmetics (T&C) Group of Manufacturers Association of Nigeria (MAN). He speaks on the activities of the sector in 2013, the need for the Federal Government to revamp industries in 2014, strict enforcement of the local content policy and the benefits of patronising made-in-Nigeria goods.
Looking at the economy in 2013, has the manufacturing sector made much impact on national development?
The manufacturing sector, especially Toiletries and Cosmetics (T&C) Group of Manufacturers Association Nigeria (MAN), recorded major decline instead of increase in productivity. Looking at the economy generally, there are many challenges. In the 60s, Nigeria’s economy was placed above Brazil, China, India, Singapore and Malaysia as a country with numerous potentials to become a technology giant.
Sadly, that has not happened because our resources are not prudently managed. Also the rulers are not living up to expectation in doing the right thing and leading by example. For example, government is only interested in revenue generation from local industries and not in their growth. We do not have good industrial policies to ensure that foreign firms coming into Nigeria partner with local companies to enhance technology transfer like what is done in other countries. Here, foreign companies come in with their chief executives, cooks, barbers and even carpenters. There must be census of foreigners in Nigeria. Does our immigration office have the data on how many foreigners are in Nigeria? Today, foreigners have taken over our economy even in Small and Medium Enterprises (SMEs) like operating barber’s salons and eateries.
Foreign firms still operate in Nigeria with almost 100 per cent foreign work-force despite the local content policy in place. Does it mean this policy is a failure?
In Nigeria, government’s policy on local content works only on paper and not in practice because government is not pursuing it to ensure compliance like what we see in other countries.
Why do most Nigerians prefer foreign products even when made-in-Nigeria goods are of superior quality?
It is the mentality of some individuals who believe that imported goods are better even when such products are inferior compared to those manufactured locally. The campaign for patronage of made-in-Nigeria goods did not just come today. It is a project that has taken centre stage of various governments for over three decades, since MAN initiated the campaign. The most recent launches occurred in 1999, 2004, 2009 and 2010. Each of the launching held out promises of economic emancipation and guzzled whopping sums of money but we are yet to feel the impact on the national economy.
In 2009, the Minister of Commerce and Industry, Achike Udenwa, launched one of the most celebrated campaigns. On that occasion, government made far reaching pronouncements including import prohibition of certain products, a ban on the consumption of foreign beverages at official functions and in government offices. Some of the items on the prohibition list include biscuits, tea, coffee, soft drinks, fruit juices and bottled water. Government’s argument was that uncontrolled importation of these items made local brands largely uncompetitive. That campaign gulped N200m. In spite of the huge amount of money and the high profile launching, the anticipated effect was not realised as the exercise was overtaken by events and the campaigned soon fizzled out just like its predecessors.
What is responsible for the exponential decay in the tempo and effect of such laudable projects, which characterised the campaigns?
The reason for failure include insincerity because, during the campaign, the dress code of the ministers and other government officials showed shoes made in Italy, the flowing gown made in Saudi Arabia, wristwatch made in Hong Kong and the pen used to sign the event register made in Switzerland. The trays, cups and plates used for entertainment were made in China.
The launching was accompanied by a lot of fanfare followed by radio jingles, television adverts and billboards with advertorials, across the length and breadth of the country. After that, what next? The whole setting reflected hypocrisy with a faulty foundation and an attitude of ‘do as I say, not as I do’. The approval by the President Goodluck Jonathan-led Federal Executive Council (FEC) to import 60,000 units of waste bins from the United Kingdom (UK) at N927.6 million may have confirmed the insinuation in some quarters that the much-promoted local content policy is a mere lip service.
Lack of political will is also an issue because sometimes there is a tendency for the sponsors of the project to use it as a launching pad for their political ambitions, to corner the huge budget associated with it or to appease MAN that government identifies with their concern for invigorating the industrial sector via promotion of made in Nigeria goods. Once their selfish ambition is achieved, the project is abandoned.
The campaign is usually narrow in scope and shallow in content, as it starts and ends in Abuja without any plan to replicate the campaigns in the states and local governments to drum awareness at the grassroots. There are no set targets or dates to measure any impact or achievements. No reviews are made. Once the incumbent minister vacates the post, the project exits with him or her.
The absence of enabling laws to back up the call for made in Nigeria products is also a challenge. In its present form, the campaign is seen as something that does not concern everybody. Majority of Nigerians are not aware of the benefits derivable for being patriotic about locally made goods .Today, there is no punishment for importing and selling finished goods that can be made in Nigeria.
This takes us to the issue of policy thrust direction. Since the advent of democracy in the 4th republic, we witnessed that efforts to jumpstart the economy are focused in two directions like attracting Foreign Direct Investments (FDIs) or encouraging and empowering local industries. The two considerations appear to be mutually exclusive events in Nigeria, so only one of them may be undertaken. Experience has shown that the odds usually favour FDIs while stimulating the economy through encouragement of local industries often becomes the opportunity cost.
The preference for FDIs is obvious as the immediate and long term personal interest overrides any other considerations including national interest. People in government who negotiate the investment inflow are guaranteed a place in the Board as Directors, while their children and cronies can also look forward to a secure future without much toil or sweat. The foreign investors are wooed with generous incentives including tax holidays of about 3-5 years, Duty-free and Value Added Tax (VAT)–free importation of their finished products for about three years and syndicated bank loans among many others. On the other hand, local investors are denied these generous conditions even in their own country.
What are the economic implications of government giving foreign investors many incentives to the detriment of local manufacturers?
That is why our economy is suffering and so many of our youths are jobless. Once they settle, the foreign investors begin to look for monopoly and so begin to plot how to kill any local competitor that may have been in the market before their arrival. They will employ all manner of antitrust tactics and even use the regulatory agencies to raise the bar to scheme out local entrepreneurs.
With the level of poverty and unemployment today, is there any hope for Nigeria’s economy?
Nigeria still has potentials in oil wealth and with huge foreign reserves; government can change the economy and move to actualise the Vision 20:2020. It is important to note that the manufacturing sector is crucial to economic development and job creation. For us to move forward like advanced countries, our government must turn attention to industrial development and there must be an enabling environment for SMEs to thrive.
Nigeria has sufficient human resources, some developed and some un-developed, but the way the resources are being harnessed is the major problem. Our school system is nothing to reckon with in terms of research capable of opening new and innovative windows for industrial growth. This is because research is not taken seriously in Nigeria like what obtains in advanced countries.
What is the way forward?
The government is the biggest earner of money and also the biggest spender. It therefore has an ultimate role to play in making patronage of made in Nigeria goods a reality. The challenges facing a typical manufacturer, like decayed infrastructure, perennial power outage, multiple taxation and dumping are well known as well as the roles to be played by various government agencies.
For instance, the country requires a cultural reorientation, which will enable Nigerians think and act in a way that will bring high regard for made-in-Nigeria goods and the Local Content Act, which is currently operational in the oil and gas sector, must be extended to other sectors of the economy, including toiletries & cosmetics manufacturing. It should start with a legislation that will make the patronage of made in Nigeria goods mandatory for everybody.
The government at the centre should lead by example by ensuring that our military and paramilitary uniforms are made with fabrics of Nigerian origin. Nigerian contractors should be preferentially considered for jobs where they have expertise. Foreign contactors must adhere strictly to the Local Content Act by partnering with indigenous contactors to help them build capacities.
Government must do everything possible to empower the local industries to mass produce to satisfy the teaming population of over 160 million. For example, raw materials for conversion into finished product, which cannot be sourced locally, should not be levied more that 5 per cent duty rate and VAT waived for such materials. In toiletries & cosmetics sub-sector, some raw materials input are still being levied over 20 per cent in spite of the fact that local sources for such materials are not available.