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The Chief Executive Officer (CEO) of Red Star Plc., Mr. Sola Obabori has reiterated the need to encourage the manufacturing industry to drive the country’s economic reforms, in order to make Nigeria competitive in export against the rest of the world, so as to achieve a sustainable growth in the economy. He stated this at the 2nd International Business Development Summit held in Lagos.
The summit, with the theme ‘Towards alternative strategies for sustainable economic growth in Africa’ was organized by the Institute of Business Development (IBD) to address under-development of SMEs compared to other developing countries and contribute to the deliberations on sustainable economic growth with a focus on significant cross-sectorial issues such as sustainable agro business, SMEs, energy transformation, manufacturing, solid minerals, aviation and ICT.
In his paper titled ‘Promoting manufacturing to accelerate economic growth and reduce volatility in Africa’, Obabori said that, although there is significant increase in manufactured exports and import-substituting production over the past decade, Africa produces only 1.5% of the world’s manufacturing output. While insisting that ‘Made in China’ products must be replaced by ‘Made in Africa’ products, he noted that the rise of production costs in China has resulted in the Asian giant investing into Africa, stating that Beijing has been instrumental in initialising SEZs in countries such as Algeria, Botswana, Egypt, Ethiopia, Nigeria, Mauritius and Zambia as a strategy to cope with increasing costs.
“For example in Nigeria, the major driving force behind the country’s economic growth should be the manufacturing sector and not the over reliance on the Oil sector. The diversity of the sector should make it contribute more to the GDP if we can address the problems of power supply and other salient challenges. FMCG such as food, beverages and tobacco sub-sectors contribute 50% of total factory output in the country. Made in Nigeria cars are being produced from at least two local manufacturers while the pharmaceutical industry has at least four companies certified by WHO to produce medicines for malaria, HIV/AIDS and tuberculosis for the international market” he stated.
He said the manufacturing capacity utilisation has been below 60% over the past five years compared to +80% readings in countries like Ghana and South Africa because the cost of production, packaging options and quality of products are some of the challenges facing Nigerian factories. This has made Industrialisation low outside of the oil and gas sector due to a lack in competitiveness of manufactured goods compared to imported items.
Obabori said that Nigeria, and Africa as a whole, will continue to lag behind if governments at all level do not make conscious efforts to strengthen institutions that can spur the manufacturing sector to better productivity, encourage citizens to patronize what has been manufactured in such countries and at the same time produce enough with high quality for export.