Nigeria Has Huge Capacity To Produce Raw Materials – Ahmed, MAN President
In this exclusive interview with Daily Trust, Engineer Ahmed said Nigeria has huge potential to produce a lot of raw materials but that means of processing them remains a huge challenge.
The Manufacturers Association of Nigeria will hold a raw materials and equipment exhibition in Laos from 12th to 14th of March this year. What do you hope to achieve by combining the exhibition for raw materials with that of equipment?
We have been hosting the exhibition for raw materials together with that of equipment for four years now. Prior to that, we were doing it separately. The justification for bringing the two together is because they are part of the same value chain. On one hand, you need to develop your raw materials and on the other hand, to do so and to produce competitively, you need to also develop the manufacturing side of it. The decision to bring the two together makes a lot of sense. I believe it has helped specifically to increase the use of local raw materials, particularly in the food processing sector.
There have been several attempts in the past to try to promote the use of local materials, not just in the manufacturing sector, but in all sectors. We see this effort as consolidating that trend. Now, efforts are going into other sectors.
To what extent has MAN been promoting the use of local raw materials in different sectors of the economy in Nigeria?
In the petroleum sector, for instance, they now have a very extensive local material development and an institution that is driving it. We are discussing with the power sector to try to promote the use of local materials and in the agricultural sector, this has made the most impact. In linking the value chain from agriculture to manufacturing such as food processing, there has been a lot of progress. For instance, with the effort of government and the private sector, there is an increased push to create processing capacity in rice and this has led to a large extend to reduce the importation of finished parboiled rice as well as increase in production of local rice.
In the last three years in particular, we have seen tremendous increase in the local production of rice from below two million tons per annum to 4 or 5 million tons per annum and that is feasible because the processing side has expanded. Without processing, you can eat padded rice. It is clear that Nigeria has huge capacity to produce a lot of local raw materials, but again lack of means of intermediate processing has been one of the major hurdles.
We know that a large number of Nigerians are engaged in agriculture. If you want to increase income and value addition, you really have to focus as much on processing capacity, manufacturing and production of basic manufacturing equipment. It has also helped small and medium enterprises to grow because a lot of the food processing industries are much stronger. For instance, I learnt that some local food products, such as preserved fura that is made in Kano is being sold in Australia. I think what we need to do is to consolidate this to formalise the processes of export and increase opportunities for export for our small scale industries.
Supermarkets in Nigeria are still dominated by imported products. Is there a move to change that?
This is very much true and it comes more from the proclivity of Nigerians, particularly from the higher income group, to prefer foreign, imported materials to local materials. To some extent, that is part of the problem and that is why we promote consumption of domestic products, actually manufactured products in Nigeria. If you attend this upcoming expo, you will be surprised at the enormous range of products that are produced locally and the quality is good.
The fura I talked about, the company has been producing a range of other products such as tea, spices, kunu and they are distributed widely. Two things happen: one is there is tendency for these products to be distributed at the lower end of the market and at the higher end, which would have gotten them into the malls – there are cost issues, and secondly, preference issue. You can put two products on a shelf in a mall – made in Nigeria and foreign imports – and you will be surprised the number of Nigerians that will go for the foreign variety. This is something that all of us in Nigeria have to work on. This is the justification for Executive Order Number five, I think, which seeks to promote consumption of local products, starting with, perhaps, even the public sector.
We were involved recently in a discussion in one of the sectors where government agencies put up contracts for significant quantity of what is being produced in Nigeria. We had to get to the level of the minister. We said look, there are two or three companies that have been producing these for quite some time and they are producing it at quality level not different from what you are importing, so we don’t see why you should not exhaust the capacity of these local companies before imports. But, of course, this is an on-going thing.
We are continuously identifying and pushing these kinds of things. I believe that part of this issue is lack of awareness. Particularly for smaller companies, their capacity to advertise their products is limited and if their actual capacity is not large, the tendency is that they identify their niche market and focus on that. But by promoting this, we’ll give those companies the opportunity to grow as well. For instance, we are virtually 100 per cent sufficient in cement production.
We are exporting cement to many of our neighbouring countries and we see that part of the challenge is that infrastructure for trade is still also very weak. If you are taking cement from Lagos to Ghana, you will be amazed at the hurdles that you have to go through even though we have the West African Economic Community Agreement, which allows these goods to move freely. We argue with various agencies, both domestically and at the ECOWAS region that there is need to make this agreement actually work, particularly now that we are going into a wider agreement at the continental level.
I’m sure you are aware of that there are efforts to expand intra-African trade through the execution of the African Continental Trade Area Agreement and when this comes through, it means that we’ll now have the entire African market open to every manufacturer and every producer in the country and in any other country in Africa. It means that this is an opportunity and also a challenge. We also have to meet the requirements of our export market or even our neighbouring countries’ in order to compete with those coming from other regions. This is why we intensify efforts to strengthen the value chain in our market to strengthen the manufacturing sector and increase its contribution to the economy, GDP in particular. This is a continuing effort.
What is the number of foreign and domestic exhibitors expected at the upcoming raw materials and equipment exhibition and what kinds of equipment will be on display?
In the past, we had quite a number of foreign participants, basically exposing machineries that could be used in our manufacturing sector and other different sectors, like food processing such as rice milling, tomato processors, food packaging and especially those that constitute the machineries required for processing raw materials. This also includes areas like furniture, automobiles and now with the new automotive policy, we are beginning to reintroduce local assembling plants for CKDs and SKDs.
We are seeing increased activities of local assemblers and this fair will promote them and the component parts that they need. This year, we have the event organisers who are responsible for attracting foreign exhibitors to the event. As at today, though many are still indicating interest and making efforts to get the approvals of their governments, we have from Canada, France, Indonesia and about 30 per cent of the exhibitors will be coming from foreign countries. They will come with different types of technologies to the exhibition. This will include artificial intelligence and new innovations in manufacturing. It is also an opportunity to showcase technologies in the manufacturing sector and that’s why we encourage manufacturers to participate in the exhibition.
Will there be some side-line events that will run concurrently with the main exhibition?
The Manufacturing for African Development is the conference side of the exhibition and the purpose is the theme of the conference: ‘Optimising the Value Chain of the Manufacturing Sector and Ensuring Sustainable Growth and Competiveness’. We are anticipating the expansion of intra-African trade and one of the things we need to ensure, before we engage in export, is that we have to be competitive.
We are looking at our manufacturing sector, the technology we are using and ensure we can increase our quality as well as competiveness in terms of meeting the needs of consumers. This conference will take place alongside the exhibition. We will also have master classes in raw materials development. There will be master classes for upcoming manufacturers and women in business.
What is the state of health of the manufacturing sector in Nigeria, especially with the continuing challenges of electricity and an economy where purchasing power is low?
If you look at the Purchasing Managers’ Index, it has been excellently growing over the past two years. If you look more broadly, you can say that the manufacturing sector is not contributing as much as it should because the total manufacturing sector contribution to the GDP is still below 10 per cent. It’s about 9.5 per cent. In a healthy developing economy like ours, if you consider Indonesia or Malaysia, you find that they are in the region of 20 to 30 per cent. So, this economy requires a much stronger and much more pervasive manufacturing sector.
Is government’s position justifiable for refusing to sign the African Continental Free Trade Agreement?
I don’t know if the government has refused to sign but I think it has not signed. When the issue came up, there was a presidential quarterly forum with the manufacturing sector and the issue came up that government was about to sign. So, the manufacturers’ association and other associations raised a number of issues. We know we have signed the trade facilitation agreement with the ECOWAS region. But, we are aware that from the experience of other members, that agreement has not been working as it should because there are areas of significant constraints.
Secondly, we asked if there had been sufficient awareness on consequences, opportunities and risks of signing it, particularly for existing manufacturers. It may be true to say that on the long term, expanding trade in Africa will be helpful but again we have to look at what happens to existing manufacturers and existing level of employment.
We raised the issue that there was need for us to interrogate that before we sign so that was why the government held back at signing even though other countries signed. But, to be honest, given the size of our economy, when you look at the African market, at least in sub-Saharan Africa, over 40 per cent of that market is Nigeria.