Removing the wedge in market opportunities, manufacturers
Due to the impact of the Covid-19 pandemic and the devastating floods across Europe and China, as well as spiking energy prices that hit power-hungry industries hard, many manufacturing industries have had to reshape their supply chain and production agenda.
Shortages of critical components and raw materials have forced supply chain sovereignty and self-sufficiency back onto the agenda for governments and boardrooms around the world.
For Nigerian manufacturers, a disruption in the supply chain alongside currency and logistics challenges meant that many operators have to look inwards and equally adjust production preferences to suit market needs and weakened demands.
While merely coping isn’t enough, to thrive and grow, companies must do more than cope. Their investors, employees, partners, and suppliers expect more — so, far more importantly, do their customers.
Indeed, the Organised Private Sector believes that the current situation of the country requires urgent intervention by the government to develop the industrial sector. The cost of not implementing crucial reforms to reposition the sector for competitiveness are evident in the weak state of the sector and in Nigeria’s high unemployment and poverty rates.
The argument of the OPS is that a business-friendly environment is the only way the manufacturing sector can improve on its about 10 per cent contribution to the nation’s Gross Domestic Product (GDP) and also support the current administration’s poverty reduction/alleviation and job creation aspirations.
According to the OPS, the continued efforts by the government to reposition critical sectors such as manufacturing on the path of growth have proved supportive, albeit slow.
Despite economic recovery, the base effects have continued to impact household incomes, forcing manufacturers to adjust offerings and preferences to the available market. With the exception of essential items, demand for manufactured goods has been slow.
A Senior Partner, Deloitte Nigeria, Bernard Orji, stated that the bulk of the Nigerian populace live under the poverty line as they could barely afford to meet their needs.
According to him, manufacturers must study the market by focusing on the needs of consumers with quality and affordable products to remain competitive.
The Lagos Chamber of Commerce and Industry (LCCI) in its GDP comments noted that the performance of the manufacturing sector shows resilience amid the major challenges in the sector such as limited access to credit and financial services, poor infrastructure and unreliable power supply that forces businesses to rely on generators, thus increasing their input costs and reducing their overall competitiveness and profitability.
Too many bottlenecks seeking solutionsChairman, MAN Apapa Branch, Frank Ike Onyebu, said the manufacturing sector which has the potential of contributing more than 25 per cent to Nigeria’s GDP, is currently doing less than 10 per cent.
He added that the slow growth of the sector as a whole is attributable to a myriad of factors including infrastructural deficiency, insecurity, global and domestic supply chain disruptions, foreign exchange liquidity, weak consumer spending and high operating costs.
Indeed, members of the OPS have advised the federal government to make deliberate efforts to remove impediments to the conduct of business in the country in 2022, especially as it relates to infrastructure and logistics.The OPS advised the federal government to direct efforts toward accelerated industrialisation for the Nigerian economy in 2022.
The leaders of the real sector noted that removing hindrances to the activities of manufacturers and other key players in the country’s real sector would enhance productivity, especially as Africa prepares to fully implement the African Continental Free Trade Area (AfCFTA).