Commerce Association says that more than half of the surviving firms are “ailing”.
At
least 800 companies closed shop in Nigeria between 2009 and 2011, due
to the harsh operating business environment, the Nigerian Chambers of
Commerce has said.
The companies that have survived are also having serious challenges as more than half of them have been classified as “ailing.’’
This
was disclosed by the President of Nigerian Association of Chambers of
Commerce, Industry, Mines and Agriculture, NACCIMA, Herbert Ajayi, on
Tuesday, in Asaba, in a paper he presented at a zonal workshop on
economic diversification organised by the Revenue Mobilisation
Allocation and Fiscal Commission, RMAFC.
Mr. Ajay said the
current situation of the “surviving” industries poses a great threat to
the survival of the manufacturing industry. He added that capacity
utilisation in industries hovers around 30 per cent and 45 per cent on
the average, with 100 per cent overhead costs.
He blamed the
continued decline in the manufacturing sectors on “political and
economic factors’’, citing poor infrastructure and epileptic power
supply as key impediments to the industry.
“The manufacturing
industry as a whole operates on more than 70 per cent of energy it
generates, using generators; and operating these generators greatly
increases the cost of manufacturing goods,’’ he said.
The
industrialist gave other reasons for the woes in the sector as incessant
increase in the price of petroleum products used by industries,
multiple taxation, unabated smuggling and inadequate access to finance,
both local and abroad.
He said widespread insecurity and the
inability of government agencies in the ports to meet their 24-hour
target, for cargo clearance, have contributed to the dwindling fortunes
in the manufacturing sector.
Government efforts inadequate
The
NACCIMA president, whose speech was delivered by the Vice President of
the association, Mary Iyasere, described current government policies to
revive the manufacturing industry as inadequate.
“For instance,
in May 2010, the government announced a 1.3 billion-dollar fund to help
banks extend credit to the manufacturing sector following the decline in
available finance after the global economic crisis had set in.
“Notwithstanding
this positive development arising from the reform process, the Nigerian
economy, especially the manufacturing sector is still confronted by
serious challenges, structural imbalance and lack of diversification,”
he said.
“The current government policies targeted at the real
sector (manufacturing) are also inadequate and preventing the
manufacturing industry from flourishing,” he added.
The way forward
On
the way forward, Mr. Ajayi stressed the need for the organised private
sector to support the government’s efforts to revitalise the sector
through the much-canvassed public private partnership.
He also called for more transparency in the ongoing government-led privatisation exercise of public enterprises.
Quoting
statistics from the Bureau of Public Enterprises (BPE), Mr. Ajayi said
between 1999 and 2011, a total of 121 firms were privatised or
commercialised, with about N250 billion realised from their sale.
“It
was also reported that 81 of the privatised firms were operating at
about 66 per cent and 41 at 34 per cent performance level,” he added.
The
NACCIMA president, however, observed that the figures are in stark
contrast to the position of the Senate ad-hoc Committee on
Privatisation, which posited that 80 per cent of the firms are not
performing.
In addition, he said Nigeria can borrow from the
lessons of the economic policies of the “Asian Tigers” — Hong Kong,
South Korea, Singapore and Taiwan — to boost the manufacturing sector.
He,
however, warned that Nigeria must exercise “caution” in trying to
imitate the Asian policies. He explained that government needs to
consider the peculiarities of the nation’s economy and marry it with
those of Asia in areas “where policies are applicable rather than
wholesale adoption”.
“This is because the casualty between growth
and industrialisation could prove to be a costly mistake as seen in
other countries, in pushing for rapid industrialisation,’’ Mr. Ajayi
stated.
Source:- Premiumtimesng
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