‘Electricity tariff hike breaches review provisions’

01112015C ogunmefunAmid the fall in global oil price, the Director General of the Manufacturers Association of Nigeria MAN, Mr. Remi Ogunmefun, in this  interview,  says there is need for President Muhammadu Buhari’s administration to hit the ground running by initiating infrastructural projects. Excerpts:

How do you rate manufacturers’ performance  on the economy following the crash of global oil price?

It has been difficult since the price of crude oil dropped. Manufacturers can no longer afford to bring in the basic raw materials needed for our industries due to high exchange rate. Many manufacturers are going through very difficult times.  However, we in the sector will continue to give our best to help the  economic agenda of  government. We are committed to providing goods required for our factories, so as to  rely less on importation. The drop in oil price is adding to the numerous challenges we face as an industry.

How do you mean?

Initially, we had a challenge of electric power which everyone is aware of. We don’t have the required power to run industries. So our people have had to rely on alternatives such as generators or gas.

There is also the lack of infrastructure. The rail service is not efficient enough. There is the problem of bad roads, inadequate water supply required for industries and then security.  These are very serious problems.  Yet, we are committed to making Nigeria one of the best  countries in the world.

There is the  clamour, even from your quarters, urging government to implement policies that would discourage importation. What actually propped this agitation?

We are a consuming nation, and, most times what we don’t produce, we import. But the goal of MAN is to make sure that what we need in Nigeria, is produced locally. From toiletries, to furniture, iron rods, roofing materials among others, products that are produced in Nigeria need not be imported. I have had argument on this in the past, particularly if those products can be manufactured here in sufficient quantity. If we have improved infrastructure and there is accessibility to funds at about 22-25 percent interest rate, single digit like seven to nine percent maximum, these could help manufacturers who plan to expand their factories as well as attract new investments into Nigeria.

But many investors shy away because of infrastructural deficiencies and other issues which we are all familiar with.

Recently President Muhammadu Buhari laid a foundation for infrastructural development in Rivers State.  How can that help in global competitiveness among Nigerian manufacturers ?

It would definitely take time. Those importers we are competing with, have infrastructure that are well developed. They don’t have problem of power, or rail system in transporting their products, they don’t have any problem with their ports, be it air or sea.  Goods are cleared within a day or two. They don’t have the problem or shortage of skills required for their industries. They don’t have all these problems and we are competing with them. So you can understand the reason many of us are crying for the development of our infrastructure. I make bold to say, if we improve on our infrastructure today and we have access to sufficient power supply, which is very critical, and our roads are good, and we have effective rail system, security and water, then Nigerian manufacturers can compete with any others in the world. But with the situation on ground, it will be difficult for us to compete and many manufacturers will be force to shut down their factories, if it continue in this manner. What many importers don’t understand is that anytime they import products into Nigeria, they are shifting Nigerian jobs abroad. Naturally, once you produce in Nigeria, you create jobs for our teaming youths and unemployed graduates.

But there is a make-believe that made in Nigeria products are inferior to imported ones. What do you say to this?

It’s a thing of the mind. As a DG of MAN, I still use locally made toilet soaps and cream that are of superior quality to that of foreign manufacturers. So, Nigerians should start taking their minds away from that paradigm of imported products being better and start looking inwards to appreciate the benefits of our made in Nigeria products. This is what will make Nigeria great.

What do you then make of building collapses in recent times traceable to substandard building materials in Nigeria?

That is the make believe of some people and I feel very bad about it. Nigerian steel industry is still developing and we have a responsible steel industry. The iron rods manufactured in Nigeria are very good and are certified by Standard Organization of Nigeria SON and other international organizations.

I feel it’s high time Nigerians started looking at iron rods imported into the country to see if they are of good quality. We observe that some of them are even lower in quality to Nigerian made iron rods.

The just concluded Nigeria Economic Summit, NES, has come and gone.  How will you describe its impact so far?

It was a good conference but manufacturers were mere participants. Nevertheless, it had a great impact particularly in re-awakening Nigerians about the economic difficulties and opportunities in Nigeria, as well as the way forward. The essence of every conference is to share ideas and be able to proffer solutions on how to solve these problems. We hope it would continue.

You have been part of many fora on national discourse on leadership in Nigeria. What is your view concerning the need for economic restructuring in Nigeria?

Economic restructuring in Nigeria for me is a way to go. We have been so dependent on oil, thereby running a monolithic economy. The issue on ground presently is the continual fall of oil price which has brought us to where we are. The oil price is volatile. So what we need to do as a nation, which is what we have been talking about over the years, is to diversify our economy. But how do we diversify? By going to the real sectors. Where is the real sector? Manufacturing and agriculture. They are the productive sectors. These are the sectors that are the future of Nigerian economy. These are the sectors that need to be developed and empowered, so that people could be producing. What we should be doing is what Chinese people did. They don’t have oil, India does not have oil, and yet they are exporting to the world and are making money for their country. That is exactly what Nigeria should do. Every indigenous manufacturer should be exporting to the world. We ought to see Nigerian products all over the world.

Do you think Nigerian manufacturers have the capacity to export to the world like her counterparts overseas?

Why not! We do have the capacity. Once we get the fundamentals correctly. With the basics for manufacturing on ground, like infrastructure, sufficient electric power supply, good roads, industrial zones clusters nationwide. Nigerians are very hard-working and productive people. Even on a competitive basis. We have actively, about 2000 manufacturing companies today, in Nigeria that are MAN members in various areas of the manufacturing. The average capacity in our factories presently is about 53 percent. But it has dropped because of the recent challenges we had on the foreign exchange ban on about 41 items by Central Bank of Nigeria (CBN), that affected some basic raw materials required by manufacturers to power the industries. So if a manufacturer does not have the basic material required definitely capacity will drop. Just imagine our people producing full capacity to what is already here, our contribution to the Gross Domestic Products GDP will jump to about 40 percent.

How achievable can manufacturers under your umbrella   make up to 40 percent of the nation’s GDP?

If manufacturers in China can be adding about 46-50 per cent to the country’s GDP, why can’t Nigeria achieve it! We are very hard-working people. Today, Nigerian manufacturers are contributing about 9.2 per cent to our GDP. We can have a progressive match to the target of 40 per cent if we are determined.

China   had this exact challenge 34 years ago. China was in shambles too. No roads, infrastructural decadence stirred at them in the face. In fact, people used to call it a grey country because they had nothing. It was a country full of bicycle riders, but they made their country what it is today by working first on their infrastructures and opened their country for investments. That was how American and European companies went there. They built factories and industries sprang up all over the place. They had very friendly investment policies and the rest is history today. I am one out of a million that believes it is achievable in Nigeria, once infrastructure and other basic requirements that will make manufacturing convenient are put in place. If all government policies are well defined and are friendly to manufacturers, the sky will be our starting point in Nigeria.

What do you make of the decision by electricity distribution companies to increase tariff?

As far as MAN is concerned, we have an existing tariff that is not due for review until 2017. Then we can discuss either to increase or reduce tariff because you can never know what the situation will bring. People keep saying they should increase tariff; why can’t it be reduced! It baffles me and I don’t understand how it came about. The DISCOs should not take Nigerians for a ride because we are operating under difficult times and difficult environment. The issue of increase in tariff on electricity is unacceptable and Nigerians should not tolerate any situation where an increase is forced on us.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.