The Director, Research and Advocacy Support, Manufacturing Association of Nigeria, MAN, Dr Oluwasegun Osidipe, has revealed that Nigeria spent the sum of N4.97 trillion from 2017 to 2020 to import products following the near-collapse of petrochemical industries in the country.
He noted that the importation of petrochemical products was the result of the country’s inability to attain self-sufficiency in producing chemical products.
Speaking at a public lecture organised by the Nigerian Society of Chemical Engineers (NSChE), FCT/Nasarawa Chapter on the topic, ‘Manufacturing as the key engine for economic growth,’ Dr Oluwasegun Osidipe, explained that the massive importation constituted a “huge drain on Nigeria’s external reserves” for the importation of chemical products.
According to him, “Nigeria’s import of chemical products was N905 billion in 2017; increased to N990 billion in 2018; N1.39 trillion in 2019; and N2.68 trillion in 2020 (National Bureau of Statistics).
“These huge imports constitute a drain on Nigeria’s external reserves with pressure on the Naira value, even though some of the chemicals could have been produced locally.”
He described the heavy reliance on importation of chemical materials despite the “highly unfavourable exchange rate parity accounts for the high cost of production and low competitiveness of the sector”, adding that the challenges involved in accessing forex have also led to the high cost of electricity for consumers, among others.
He observed that some issues stifling the manufacturing sector, include the high cost of transportation due to the hike in refined petroleum products and bad roads and the low demand for commodity caused by a backlog of unpaid salaries.
Others, he said, are the high cost of borrowing from the commercial banks, over-regulation by all tiers of government and the lack of synergy between Research, Professional, Tertiary Institutions & the Industry Economics & Statistics Department, among others.
Dr Oluwasegun Osidipe stressed the need to develop key sectors and industries with a high inter-industry linkage (machine industry, iron & steel, petrochemical sectors, etc).
He called for the provision of adequate incentive (monetary and fiscal incentives) for companies embarking on backward integration and encouraging more investments in petrochemical, machinery and iron & steel development, with appropriate incentives, among others to revive the comatose manufacturing sector.
Looking at China and Nigeria’s industrial development, to demonstrate the extent manufacturing plays in determining the per capita income and rate of development, Dr Osidipe said China’s development hinged manufacturing as the key to long term social and economic development of any country.
He explained, “From 1960 to 2003, Per Capita Income of China in current US-Dollar value averaged $342.09 and within this period, there was no perceptive record of manufacturing value, added in the country. However, from 2004 to 2019, China’s Per Capita Income averaged $5,412.00; $8,458.69 from 2015 to 2019; and was recorded as $9,770.85 in 2019. From 2004 to 2019, manufacturing value addition was 30.56% which is the highest in the world, while the unemployment rate was very low at 3.8% in 2018.”
The Director said the development trajectory of China far outpaced that of Nigeria within the same period even though Nigeria began with a better footing.
“From 1960 to 2003 when Nigeria’s country’s Per Capita Income was US$508.22, which is higher than China’s US$342.09 at that period. China moved up the ladder from 2004 to 2019 when Nigeria’s Per Capita Income averaged US$2, 175.01 and US$2,425.12 from 2014-2019, while employment was recorded higher at 22.56% in 2018,” he added.
Earlier, the Chairman of the occasion and the National President of the NSChE, Engr. Saidu A. Mohammed hailed the NSChE FCT Nasarawa chapter for organising such a public lecture series.
Chairman of the chapter, Engr. Onyekachi Onugu explained that the inability of the chapter to hold the lecture series in the past years had been a result of the COVID-19 pandemic.
He assured those present that efforts have been completed to regularly organise the events at a regular interval.