Transforming Nigeria’s Manufacturing Sector

’The time for half-measures and piecemeal solutions has passed. We need a comprehensive, intentional approach to developing our manufacturing sector. This approach must be rooted in sound policies, strategic investments and unwavering commitment from both the public and private sectors.’

Isaak MOMOH

This was the summary of Segun Ajayi-Kadir’s  opening speech at the 3-day Made-in Nigeria exhibition of the Manufacturers Association of Nigeria  which held between 22^nd and 24^th of October 2024 at the Lagos Oriental Hotel Victoria island, Lagos.

Theme of the event was ‘The Imperative of an Intentional Development of the Nigerian Manufacturing Sector in an Era of Economic Downturn’;(and there was this tail added, perhaps to add meaning to the theme)…and how public procurement policies can be used to improve the manufacturing sector in our great nation. So here came the summary.

Here goes Segun Ajayi-Kadir in his resourceful style:

‘… our nation faces unprecedented economic challenges in which the manufacturing sector is not insulated from. The challenges facing our manufacturers are multifaceted. However, in the face of these challenges, we must not lose sight of the immense potential our manufacturing sector holds. It is a key driver of job creation, technological advancement, and economic diversification. A robust manufacturing sector is essential for reducing our dependence on imports, conserving foreign exchange, and positioning Nigeria as a competitive player in the global market.

For him, it is time for serious business; no more half measures: ’The time for half-measures and piecemeal solutions has passed. We need a comprehensive, intentional approach to developing our manufacturing sector. This approach must be rooted in sound policies, strategic investments and unwavering commitment from both the public and private sectors.’

How do they want to go about it? How? – ‘In the bid to proffer solutions to fixing the challenges, we must double down on our efforts to promote Local Content and patronage of Made-in-Nigeria goods. The Government at all levels must lead by example through effective enforcement and implementation of existing local content policies across all ministries, departments and agencies. By creating a guaranteed market for locally manufactured goods, we can stimulate production, drive innovation and lead to economic boom.

And here are the details according to Ajayi-Kadir:

The Power of Public Procurement

Public Procurement, the process by which government entities acquire goods, works and services, is a powerful tool that can shape our economy. In Nigeria, where the government is a major spender, public procurement policies can significantly influence the direction of our industrial development. The impact of well-crafted procurement policies on local manufacturing cannot be overstated, and the BPP, in line with the Renewed Hope Agenda, is already taking measures to protect and support our manufacturing sector through its proposal for the amendment of the current Public Procurement Act (PPA) 2007. By prioritizing locally manufactured goods, we can:

1. Stimulate economic growth;
2. Create jobs;
3. Encourage innovation;
4. Reduce dependence on imports; and
5. Strengthen our industrial base.

Current Initiatives

It is soothing to note that Nigeria has already taken significant steps in the right direction. In 2017, the Federal Government issued an Executive Orders 003 and 005 on Support for Local Content in Public Procurement. This Executive Orders mandate that all Ministries, Departments, and Agencies (MDAs) of the Federal Government must grant preference to local manufacturers of goods and service providers in their procurement processes. Key aspects of this order include:

1. A requirement that at least 40% of procurement expenditure on certain items by federal ministries must be for locally manufactured goods or services;

• Mandatory disclosure of local content plans in bids submitted to government institutions;
• Preference for foreign companies must show demonstrable plans for indigenous development, when local expertise is lacking.

These initiatives represent a strong foundation, but we must build upon them to fully realize the potential of public procurement in boosting local manufacturing. I am here to present a new Bureau of Public Procurement that is willing and ready to collaborate with key stakeholders [such as the Federal Ministry of Industry, Trade and Investments, Standard Organisation of Nigeria (SON), Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) and others] in the manufacturing sector to develop intentional policies, roadmap and implementation framework that will deliver sustained inclusive economic growth, boost agriculture to achieve food security and accelerate diversification through industrialization and manufacturing in line with the President Bola Ahmed Tinubu Administration’s Renew Hope Agenda.’

He goes on to offer enhancements:

Proposed Reform Enhancements

‘To further strengthen our public procurement policies and their impact on local manufacturing, I propose the following reform enhancements:

1. Expand Preferential Treatment

While the current 40% requirement for local content is a good start, we should aim higher. I propose gradually increasing this percentage over the next five years, with the ultimate goal of reaching 60-70% for key sectors.

2. Implement Stricter Enforcement Mechanisms

We must ensure that our policies are not just words on paper, but are effectively implemented. This requires:

1. Regular audits of procurement processes
2. Penalties for non-compliance
3. Rewards for agencies that exceed local content targets

3. Enhance Capacity Building Programs

To ensure that local manufacturers can meet the increased demand, we must invest in capacity building. This includes:

1. Providing technical training and support
2. Facilitating access to finance at competitive rates
3. Encouraging technology transfer from foreign partners, especially in the emerging areas like renewable energy and other products that are deployed in combatting Climate Change

4. Promote Innovation Through Procurement

We should use public procurement as a tool to drive innovation in local manufacturing. This can be achieved by:

1. Setting aside a portion of procurement budgets for innovative local solutions
2. Implementing challenge-based procurement for complex problems
3. Encouraging public-private partnerships in research and development’.

Addressing Potential Challenges

Yes challenges must crop up and he addressed the issue:

‘While these policies hold great promise, we must also address potential challenges we have noticed over the years:

1. Quality Concerns

To address concerns about the quality of locally manufactured goods, we must:

1. Strengthen the role of the Standards Organization of Nigeria in certifying local products
2. Establish a multi-stakeholder Watch Dog as an independent monitoring platform to combat counterfeiting
3. Establish an effective feedback mechanism that comprise the manufacturer, regulator and the consumers

• Establish efficient Customer and After-Sales Support Centres
• Invest in upgrading manufacturing facilities and processes

• Implement rigorous quality control measures

2. Capacity Constraints

To overcome capacity constraints in local manufacturing, we should:

1. Implement phased demand targets to allow for gradual capacity building
2. Encourage collaboration and consortiums of local manufacturers to meet large-scale procurement needs
3. Facilitate partnerships between local and foreign firms for knowledge transfer

Conclusion

Concluding, he argued:

‘The potential of public procurement to transform our manufacturing sector and drive economic growth is immense. By implementing and enhancing these policies, we can create a virtuous cycle of local production, job creation, and economic development.

Let us seize this opportunity to build a stronger, more self-reliant Nigeria. A Nigeria where our factories hum with activity, where our workers are employed in dignified jobs, and where our products proudly bear the label “Made in Nigeria.’

The journey ahead may be challenging, but the rewards are great. With your support and collaboration, I am confident that we can harness the power of public procurement to unlock the full potential of Nigerian manufacturing sector.

In conclusion, I call upon all stakeholders – government officials, industry leaders, financial institutions, and every citizens – to join hands in this crucial endeavour. Let us commit to the intentional, strategic development of our manufacturing sector. Together, we can turn this era of economic challenge into an opportunity for transformation and growth. The time to act is now. The future of our nation depends on it.’

So, like Otunba Francis Meshioye, MAN’s big boss, he believes, as a nation, a serious nation, we should passionately think Made-In-Nigeria goods.

Otunba Meshioye advised on this issue of sticking with home-made goods, we should take a cue from China. Sad he:  “A good example is the Made-in-China (MIC 2025) government initiative. Made-in-China initiative is a 10-year comprehensive strategic plan by the Chinese government. The initiative focuses on intelligent manufacturing in 10 strategic sectors. The aim is to cut down China’s reliance on foreign technology imports, boost domestic manufacturing and enhance local product production for local and international markets. The target is to grow domestic content to 40% by 2020 and further to 70% by 2025 through incentives by the Chinese government. Today, China is a testament to the success story of countries with improved local content development.”

 He argued, “Nigeria has the potential to re-enact this feat! We only need to be intentional in our approach to accelerating the development of domestic production”.