- Local Producers Task Government on Improving Quality of Infrastructure
Notwithstanding efforts to revive some sectors in the manufacturing industry, stakeholders in the real sector have urged government across all levels to improve the quality of infrastructure in the industrial areas.
Citing the costs of parlous infrastructure on local production, the operators stated that the industrial sector depends heavily on constant power for production and good road network to facilitate logistics, noting that all of these issues affect competitiveness of the real sector.
Despite the potential to generate 12,522 megawatts (MW) of electric power from existing plants, Nigeria most days, is only able to generate around 4,000 MW, which is insufficient for domestic consumption and local production. To fill the gap, manufacturers have incrementally generated at least 13,000MW of electricity under their Independent Power Projects (IPPs), and microgrid platforms to meet their operational demands.
Indeed, the Lagos Chamber of Commerce and Industry (LCCI), while stressing the need for fiscal policies in the real sector called for the strengthening of the capacity of domestic industries, enhance their competitiveness, and reduce their import dependence as espoused in the Nigeria Industrial Revolution Plan (NIRP).
“More importantly the power issue needs to be addressed. It is almost impossible to achieve rapid industrialisation without resolving the issue of power and the deficit in key infrastructure. Textile production is energy intensive. This is a high energy cost environment and it is very difficult for any energy-intensive sector to survive”, the LCCI DG, Muda Yusuf, explained.For the Manufacturers Association of Nigeria (MAN), noted that the poorer the infrastructure, the higher the cost at which they can produce and deliver products to the market.
“When you are manufacturing, the first step is making an investment, so you want to look at the conditions that will make that investments worthwhile. The investment climate is key, and I think we all know this over the years. This Government has been working on improving the business environment, as there have been several initiatives to improve the investments climate and thereby making investments and businesses easier for investors.
“So, building infrastructure is one of the most critical responsibilities of the Government for industries as a whole to be more competitive.“One major constraint of the manufacturing sector in Nigeria is the cost of financing, which is very high. For instance, if you borrow funds to invest at 20% interest rate, you must make more than 20% for that investment to yield benefit.
“In other countries, it is less than 10% interest rate for investments; this means that you will have problem competing with manufacturers from those countries. Cost of financing is very important, and we must continue to work with Government to encourage the financial systems to continue to bring down cost of finance”, MAN’s President Mansur Ahmed, added.