The President of African Development Bank (AFDB), Dr. Akinwumi Adesina has said that addressing the country’s energy deficiency and reliability would boost the industrial sector performance and growth.
Noting that no business could thrive in Nigeria without relying on generators, Adesina identified high cost and unreliability of electricity as major constraints in manufacturing sector.
The AfDB president, at the 49th Annual General Meeting (AGM) and 50th anniversary of the Manufacturers Association of Nigeria (MAN) in Abuja, pointed out that inconsistent availability of electrical power had resulted in high and uncompetitive manufacturing cost as most manufacturers provided their own energy with a high dependence on generators and diesels.
Adesina further emphasised the need for massive investment in renewable energy including gas, hydro power and large scale solar systems to guarantee stable power for industries.
He said, “Nigeria must have greater ambition for its manufacturing sector, by driving greater specialisations and competitiveness, a well developed policy enabled manufacturing sector with an export oriented goal.
“The performance of the manufacturing sector for the past five years has been poor. Between 2015 and 2017, the sector declined by minus one percent, 4.3 per cent and minus 0.2 per cent. While Asian countries are focused on export of manufactured products, Nigeria’s approach has been on import substitution.”
According to him, Nigeria lbs manufacturing sector represented only three per cent of total revenue from exports, but accounts for 50 per cent of imports into the country.
He said bold policy initiatives were needed to drive agriculture in order to boost the economic prosperity of the rural population.
He said it was important to develop special agro processing zones across the country with infrastructures and logistics to support private sector food and agriculture companies relocate close to the areas of production and to process and add value to the food and agricultural economy.
Adesina said Nigeria needs greater export diversification to boost its forex supply to support its industries as wellas focus on domestic manufacturing and expand local contents by rapidly moving into processing of raw materials, manufacturing of equipment and machineries which form 50 per cent of the import.
This, he said would boost manufacturing, access to affordable financing especially long term financing that matches the investment gestation of companies.
He said, “There is a compelling need to move away from a primary dependent on managing demand for forex to expanding the supply and availability of forex should greater export oriented manufacturers, this will extricate Nigeria from relying on the export of crude oil for access to forex.
“The perennial constraints facing manufacturers is the unpredictability and availability of foreign exchange, this is not an easy issue but it must be addressed and structured
“Sound policies make the economy thrive, multiple exchange rates create opportunities for financial gain while restrictive access to foreign exchange manufactures has led to dependence on the parallel market.”