Economic challenges as bane of growth



Thursday, January 24,2019

Industry stakeholders have admitted that constraints in the country’s manufacturing sector are the hampering successful implementation of the Federal Government’s diversification programme. Taiwo Hassan reports

It has been said in different fora that Nigeria’s solution to aggressively compete at international level is to diversify from oil and invest in human capital development.

Tinkering along this line, the current administration under President Muhammadu Buhari had listed three key sectors of the economy, namely, manufacturing, solid minerals and agriculture, as part of its diversification programme.

In fact, it was emphatically stated that diversification to non–oil sector is the only way out for Nigeria’s economic development.

Malaise in manufacturing

However, the success of the country’s manufacturing sector has been in the heart of every government because of the critical role the sector is playing towards attaining optimal growth in gross domestic product (GDP) and industrialization.

It is also a focal point of the present administration to measure improvement in the country’s industrial sector aftermath of decades of neglect.

Ironically, for such an important sector listed to revive the economy, it is regrettable that the sector is yet to impacted positively on the country’s GDP.

The reason for this is not far-fetched as the sector is still being faced with major constraints.

For instance, challenges, ranging from infrastructure deficit, multiplicity of taxes, policy contradictions, exorbitant cost of clearing and transporting raw materials from ports to the factories, poor access to Lagos ports, among others are still constraining the sector from attaining its potential.
Sadly, these constraints have impaired the successful implementation of the economic diversification initiated towards re-jigging the economy.


Raw material sourcing

However, it is no longer news that the administration of President Buhari has reiterated to pursue aggressively the usage of local raw materials and inputs as part of its diversification agenda.

The reason for this industrial local capacity move is not far-fetched as Nigeria has been an import dependent country.

Regrettably, the dearth of capacity utilisation in the industrial sector has been the key reason for backwardness in the country’s manufacturing sector

In fact,it has also inhibited the ability to accelerate action on the country’s resource-based industrialisation programme adopted by the Federal Government through deliberate funding and creation of an enabling environment.

Thus, the only way to overcome this menace is to ensure that industries stick to usage of local raw materials and inputs for manufacturing of products.


Dearth of capacity utilisation

However, no doubt, the failure to boost capacity utilization in the industry has continued to cause recurrent challenges in the economy such as unavailability and high cost of investible funds, poor electricity supply from the national grid as well as poor transportation infrastructure across the country, thereby affecting manufacturing production outputs.


Experts’ position

In his response to lull in the country’s economy, the President, Lagos Chamber of Commerce and Industry (LCCI), Babatunde Runwase, stressed that there was need for government to focus on how to build a strong national economy as a matter of first priority by aggressively paying attention to manufacturing development.

Runwase lamented that Nigeria belong to countries endowed with abundant natural resources but yet remained underdeveloped and poor, attributing this to failed leadership and policies of government.

The LCCI boss blamed the nation’s economic woes on the inability of successive administrations to halt the country’s undue dependence on crude oil.

This reality, he stressed, underscored the need for economic diversification, development of the nation’s human resources and promotion of the culture of enterprise.

“This is the way to ensure an economic progress that is inclusive, equitable and sustainable,” Runwase said.

Insisting on a strong economy, he said this could be achieved by ensuring an enabling environment to entrepreneurs and supporting them with appropriate policies and initiatives.

An economic consultant, Mrs. Lolade Adesola, said the implication would slow down the progress of the Federal Government’s diversification progress, saying that this would translate to reduction in demand for local products manufacturing.


Last line

Until the bottlenecks in the country’s manufacturing sector are removed, only then would Nigerians see the positive impacts of the diversification programme of the Federal Government in the economy.

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