- Nigerian manufacturing has stayed afloat in a difficult business environment. But it’s time the government sorted out the power question
Dreary news, indeed: by Manufacturers Association of Nigeria (MAN) figures, factories in Nigeria spent N129.95 billion on petrol, diesel, gas, low-pour fuel, coal and inverters (what MAN dubbed as “alternative power sources”) to power their generators. This was in the face of dwindling and erratic electricity supply, from power distribution companies (DISCOs).
That 2016 figure, of N129.95 billion, more than doubled the 2015 figure of N58.82 billion. In percentage terms, it is a whopping leap of 121 per cent.
But also some cheery news, by the same MAN figures. Despite this humongous spend on power substitutes, MAN put the estimated values of manufactured goods in Nigeria at N5.02 trillion, in the second half of 2016, marginally up from N4.08 trillion the manufacturing sector posted for the second half of 2015.
Not only that. By MAN figures again, investment in manufacturing increased from N489.45 billion in 2015 to N614.55 billion in 2016, an increase of N125.1 billion, though the value, in real terms, would be subject to the rate of inflation over the period.
Despite the power woes, the manufacturing job front had more to cheer than to jeer, both in the hiring and firing of workers. Manufacturing created 10,061 jobs in the second half of 2016, as against 9,393 jobs in the second half of 2015, thus making a marginal net gain of 668 jobs.
The retrenchment front was even sweeter, for progressively, less jobs were lost than in the previous year. In the second half of 2015, manufacturing shed 12, 400 jobs, as against the 4, 408 jobs lost in the second half of 2016, thus recording a decline of 7, 992 in job losses.
That indeed is cheery news, despite the recession, for it clearly indicates, if the trend holds, a resurgence of jobs in the sector; and maybe suggests the recession may be gradually lifting.
From the balance of these statistics, the manufacturing sector deserves praise for its hardiness, its resilience and its sheer staying power, despite a vicious operational environment, as epitomised by the serious power problems.
But it could also indicate the sheer depth of the market, awaiting manufacturing opportunities. In terms of numbers, it is an open secret that the Nigerian market is huge. Nevertheless, the market is not driven by sheer number alone. There should be adequate earning power, as well as low inflation, to effectively consume — or make what is called “effective demand” in basic economics. Still, a huge population holds the potential for a huge market.
But again, nothing says the entrepreneurs should literarily kill themselves to milk their market, which appears the lot of Nigerian manufacturers, given the shambolic power situation. There is no other way to put this negative reality than posting a 121 per cent increase, from one year to another, in fuelling bills, just to make up for power failure.
That puts the challenge right back in the Federal Government’s court. For starters, there is no way Nigerian manufacturing could be competitive in the so-called globalised market, with such humongous bills on alternative power.
That not only hurts local products (thus negatively affecting individual businesses), it also scuppers the Federal Government’s push for Nigerians to make what they use and use what they make. That would be a bad dream, indeed, for the country’s push at self-sufficiency in at least basic goods and services.
Which is why the government must examine and push every positive initiative to crack the power conundrum. The manufacturers have shown admirable courage and resilience, in the face of unbearably harsh operational environment.
It is time the government too pulled all stops in solving the power question, including liberating the over-centralised grid system, to allow more embedded power solutions, particularly in Lagos, Kano, Aba, Nnewi, Port Harcourt, Kaduna and other industrial hubs nationwide.