Now is time to resuscitate manufacturing sector
The United Nations Human Development Index (2007) also ranks Nigeria 158 out of 177 countries which is a significant decrease in its human development rank of 151 in 2004; and World Bank Development Indicators (2000) have placed Nigeria among the 20 poorest countries of the world. The issue of poverty can be easily traced to […]
The United Nations Human Development Index (2007) also ranks Nigeria 158 out of 177 countries which is a significant decrease in its human development rank of 151 in 2004; and World Bank Development Indicators (2000) have placed Nigeria among the 20 poorest countries of the world. The issue of poverty can be easily traced to mono-economic practice and underutilization of the nation’s endowed resources, especially in manufacturing sector which could have opened up windows of opportunity in job creation and economic development.
After the discovery of crude oil in Nigeria in the late 1950s, the nation shifted from its preeminent developing industrial production base and placed heavy weight on crude oil production; not only has this jeopardized its economic economics activities, but also aggravated the nation’s level of unemployment.
Creating an enabling environment is an imperative for Nigeria to attract and sustain both local and foreign investors for industrial and commercial activities in the country. This refers to effective national policies, laws, physical infrastructure (road, electricity, water, healthcare, etc.) and other infrastructure (access to education, finance etc.) that need to be put in place for people to be able to use Information Communication Technologies (ICTs) for economic, commercial and social advantages. For instance, the United Arab Emirates (UAE) has been able to put in place the industrial enabling environment to pull both local and foreign investors through whom it has recorded a remarkable development in its economic activities.
Stable power supply is another factor which largely determines the presence and development of manufacturing sector in any developed economy. Regular power supply has marked the basis for the increasing level of intensive capital production among the G8 economies such as West Germany, France, Italy, Japan, United Kingdom, United States, Russia and Canada. Ghana has followed same trend and ends up attracting most of foreign manufacturers such as Nigeria Dunlop Ltd which vacated Nigeria due to irregular power supply. Also, about 90 percent of the textile industries previously operating in the country have relocated to other countries in search of regular power supply. This has caused the nation millions of job opportunities and capital flight.
Nigeria has demonstrated a lukewarm attitude towards Research and Development sector despite a number of R & D institutes including universities and polytechnics in the country. However, these institutions are poorly funded; as it is evident that the nation’s annual estimation provides little percentage for the R & D sector of the economy. Science and technology research has been found to be important since it plays an integral role in the creation of new knowledge and skills as well as driving the world economy. Notable advanced nations like United States place more emphasis on R & D as it allocated about 64.8 percent to R & D in 2010 fiscal year.
The inability to translate research discoveries into reality is another menace backpedalling and discouraging manufacturing research and development in Nigeria. The sector, if skilfully manned will lay a solid foundation for a fresh agro-chemical development that will be a critical factor in agro-economic expansion and indirectly answered industrial needs for raw materials.
Nigeria needs a considerable review of its tax policies also which must be done to catalyse investment and commercial activities from both local and international directions as well as discourage importation of goods, especially the basic needs for which the country has production capacity. The Nigerian Company Income Tax Act (CITA) of 1961 amended in the year 2007 mandates a deduction of 30 percent tax rate on a company annual income for the assessment year. Consider the comatose level of infrastructural facilities in the country, this percentage would become a burden on some industries, as they might lack the capacity to dutifully observe their tax obligation at regular period. For instance, Russia is identified among the G8 economies for it has placed an enabling environment and favourable Industrial Tax rates between 20 percent and 24 percent on manufacturing sector.
Furthermore, tax can be used as a weapon to discourage the ongoing massive level of importation in the economy. For instance, the Central Bank of Nigeria (CBN) reported that Nigeria has spent N155billion on rice importation in 2010. This awful phenomenon has called for a question as why should Nigeria be a major importer of rice as it is blessed with good climate and resources to produce the commodity locally.
There is a compelling need for the review and full implementation of the Nigerian Industrial Policy of 1977 which aimed at encouraging and advancing the interest of Nigerians and enhancing their full participation in the control and management of business activities in the country; as various forms of abuses and shortcomings in the implementation of this policy have prevented the full realisation of its noble objectives. It has been reported that the foreigners still connive with Nigerians to fake business ownership in the country. Consequently, Nigerians have little control over industrial enterprises.
Nigeria can exert a pull on manufacturing sector with considerable employment opportunities by recycling production. It has been argued that each household produces around one ton of rubbish every year, which equates to around 29.1 million tons for the United Kingdom each year. Waste materials have for long posed series of environmental challenges to Nigeria. United Kingdom has seen waste management as an opportunity for recycling activities and employment generation. Nigeria can take advantage of its environmental conditions and develop a workable recycling system to enhance capacity building. This will automatically resolve both environmental pollution and unemployment in the country.
Abubakar, NYSC writes from Revenue Mobilisation Allocation & Fiscal Commission (RMAFC), Abuja ([email protected])