27 July 2008

Nigeria's Industrialization Still a Far Journey -Okoye, Man Boss


DR. Ifeanyi Okoye, mni is the National Vice President (Eastern Zone) of the Manufacturers Association of Nigeria (MAN). He is also the Chief Executive Officer of Juhel Nigeria Limited, a manufacturing outfit based in Enugu. He served as chairman of MAN Enugu/Anambra States chapter

for a period of eight years before he was elected into the national executive of the body two years ago. Okoye was recently re-elected to serve another two-year term. In this interview with, he raised an alarm over the decline in infrastructure, especially energy as well as the rising interest rate charged by banks. He likened Nigeria's manufacturing sector to "sending citizens to war without arms."Excerpts:

Key points

*Closure of industries on the rise, a danger signal for the economy

*High interest rates cripple manufacturing sector growth

*Nigerian graduates un employable, creates dearth of qualified manpower

*Manufacturing sector fared worse under Obasanjo with energy sector at zero level

*Infra structural decay bane of industrial growth

WHAT are the major challenges currently being faced by the manufacturing sector in the country especially as it relates to manufacturers in the South Eastern zone?

*Dr. Ifeanyi Okoye...our graduates are worse now

I think the challenge remains the same thing we have been talking about that is the problem of infrastructure and especially the energy aspect of it. For sometime now it is like electricity supply to the South East has become worse and I think the same is applicable to all parts of the country. It is just that we are hopeful that the promises we are having from the government, if they come true, that will be the only saviour. We are also faced with other problems as water, bad roads, access to finance; now you can see the interest rate is going up again.

Interest rate on borrowing is now going up from 15 per cent to 21 per cent and I don't think it is suitable for anybody to operate within the manufacturing sector, especially when it has to do with finance because if you don't have the money, you have to borrow. If you borrow and the interest rate is so high you can not operate and even when you can operate, you can not compete within the West African sub-region which is the nearest selling point.

Then we have the issue of security, which is a very serious problem. No industry can operate effectively without security and most times they make their own private arrangement for security which gulps a lot of finance. There is an aspect that is now crippling in and that is the manpower. The Nigerian graduates are becoming worse now. People come to tell you that they are engineers but by the time you talk to them you will find out that they are not what they claim. People come to tell you that they are accountants; by the time you interview them they know nothing.

So, it will be good for the federal government to look at the educational sector because if you need manpower and you don't see qualified youths to employ, the manufacturer will be forced to employ from outside, which is very dangerous. It is really dangerous for us to hire outsiders simply because we have unqualified manpower. The issue of education must therefore be properly looked into. These are the key challenges that require urgent redress by the government for the nation's manufacturing sector to grow and I believe the government will do something.

Do you mean that our young graduates are not employable any more?

Yes, the situation now is really bad. Our graduates are worse than in the past. You can not talk to a graduate and be convinced that he is one. You will begin to doubt whether the person is actually what he is claiming. The situation is really bad now. My company in particular tries to subject them to serious writings to first of all prove that they went to school and not relying on any type of certificates they possess. At the end you get disappointed by what you see.

Is that not an indictment on our tertiary institutions?

That is exactly what I am saying and there is need for urgent Federal Government's intervention to address the problem in our educational sector because it is dangerous for us to continue this way.

The MAN has been crying to both the federal and state governments over the myraid of problems confronting the sector in the past years. Has the government shown the will to respond to these needs?

You know the state governments have very limited things they can do to solve such problems as regulating interest rates, may be they can maintain the roads and do a little about security, but you know the security of the state does not really depend on the state governments; it is still a Federal Government's affair. So, the state governments are trying their best and I will tell you that some states in the South East like Anambra, Enugu as well as Rivers in South-South are doing very well in terms of roads. It is only in Abia State that I haven't really seen much happening in terms of roads. Imo is trying its best.

The state governments, I think, are trying but the main problem should be solved by the Federal Government. Though, like I said the Federal Government made a statement about the power sector and I think with what they are doing now especially the funds already provided, we have hope, and we will only encourage them to go ahead and not go back.

I have had the opportunity of discussing with the previous government, which made promises in this regard and at the end nothing positive came, but the present government, though it seems to be slow, it has good plans and means well. The current government has spent enough time to plan, we only ask them that execution should follow immediately the planning stage was over, and I think they are already executing with the funds they have provided. There is hope, they are trying their best. We only pray that they try to give us what they promised.

How do you rate the performance of the manufacturing sector under the immediate past regime of President Olusegun Obasanjo?

I think that was the worst period for the sector. It was one of our worst period because the energy sector dropped to zero level. There was no improvement of the energy sector; the crime rate was higher; the only aspect they did well was in the stabilization of the exchange rate, where we give kudos to the Central Bank of Nigeria governor. They did well in that regard and it enabled the Nigerian manufacturers to plan in terms of import and export, raw materials and machineries. But the security and other infrastructure were very bad and the manufacturing sector really suffered under that regime.

You talked about the rising interest rate. How has this affected your operations?

The interest rate I am talking about are charges on loans obtained for manufacturing activities and if it is high it will definitely be difficult for you to repay. And I said the rate has started going up again which is very dangerous. It has gone up to 21 percent when we had enjoyed between15 percent and 17 percent in the past. So, I think it is worth drawing the attention of the government now before it gets out of hand.

Don't you think that the Central Bank of Nigeria allowed the increase?

I think the banks cannot increase their interest rates without the Central Bank's approval. I believe the apex bank is aware of what is happening and whatever reason they have for this ugly development, they should find a way of stopping it.

How conducive is the current Federal Government's policy on importation to the manufacturers especially in sourcing their raw materials?

There have not been any major changes in the policy. MAN had made contributions to this year's budget during the pre-budget presentation to the Federal Government and if our advice is taking, I don't think there will be problems. For now there is no problem in that regard.

Manufacturers have always complained about the over dependence on imported goods by Nigerians, a situation they say, does not encourage local manufacturers. Do you think the home-made goods are meeting the needs of the people?

It depends on the type of goods you are talking about. You don't expect them to meet the needs of the people the way they are supposed to without the help of the government. When the environment is not conducive, you don't expect them to perform miracles. It all depends on the type of support the manufacturers are getting from the Federal Government in terms of finance and other infrastructures. Their performance depends largely on the government.

In the past we've heard reports of some industrial concerns shutting down on account of poor infrastructure and lack of encouragement by the government. Do we still have such bad stories among your members?

Small companies are actually shutting down. Virtually all the textiles industries have shut down and one of the major reasons is parallel importation and smuggling, which we have written the Federal Government to discourage and see how it can be stopped. The poor infrastructures, lack of affordable finance and all other factors I have talked about earlier are making it impossible for industries to operate in Nigeria . The rate of shutting down by industries is increasing by the day. The rate might reduce if the current government does something positive but for now it is increasing, more and more industries are shutting down. We are only managing to remain in business. The industries will do better with improved government's support.

Coming down to the South East, what do you think are the basic things the government needs to put in place to encourage the manufacturers to boost production?

We are operating from the same environment. However, the eastern sector has two peculiar problems: Security is one of them and that has to do with the activities of the police, the activities of the hoodlums they employ as local government agents, blocking the roads and all that. Time has come for the government to make very serious check on that, and the roads, like I said, most of the South East governments are doing well now especially Anambra State, Enugu and Imo, even Rivers and Cross River are also doing very well. In terms of revenue collected from manufacturers, they should be streamlined so that the operators are not subjected to extortions by revenue agents who disturb people carrying goods at different places.

There appears to be another major problem resulting from the high cost of diesel. How are you coping with the situation?

Without being told, in fact it is another major impediment to our operations. Since there is no adequate power supply most manufacturers rely on alternative source of power which is usually the use of diesel powered generators and diesel is also used for transporting goods out of the factories. So, for the cost of diesel to go up between N150 and N170 per litre as currently being witnessed, is completely unacceptable. It is really unbelievable that we cannot refine our petroleum products locally in Nigeria . It is a shame that Nigeria has been operating only three of its refineries which are even under-utilized. The government should do everything possible to get these products refined and make them available to the people because if we continue to spend money buying diesel as we are doing now, definitely the cost of products would be too high, which might make the products unmarketable in the country. It is a very serious problem and the government should quickly intervene.

How do you see the proposed South East Economic Commission which governments of the zone are putting together?

There is need to sit together and talk. I am not against the proposal but there is need for proper planning. I am not against it, it is a good idea but I think implementation might be the problem. There are companies jointly owned by governments of the South East which have remained moribund over the years.

As an industrialist, do you think these industries can be resuscitated?

I believe they can be resuscitated and the only way this can be done is by privatizing them. Like we have always said, government has no business in business. What they should have done all along was to invite the private sector to take them. What they need to do right now is to sell off those companies to the private investors to re-awaken them. I think some of them are still viable.

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