The Manufacturers Association of Nigeria has identified the high cost of production as a significant barrier to the competitiveness of locally made goods.
The Director General of MAN, Segun Ajayi-Kadir, said while Nigerian products meet international quality standards, they face challenges in competing with imported goods due to a harsh operating environment, according to The Punch.
He said that although exports present a viable opportunity for manufacturers, they are hindered by escalating production costs.
He said, “Export is always a viable opportunity for you to increase your profitability. I mean, if you can produce and export, you will earn dollars, improve the economy, and even assist you in importing some of your machines and raw materials that are not locally available.
“But you then ask, is this export for export’s sake? Because if it is exported, you must be able to sell it in the international market.
“So it is not just enough for you to put your goods on a ship or aircraft and then take it into another country. Your goods have to go to that country and compete with those from so many other countries and even the ones produced in that country.”
According to him, the prices and quality of locally manufactured goods must be competitive to succeed in the market.
“So, if you are facing a high-cost environment, your export cannot be competitive, even though the exchange rates will favour you as your currency will be cheaper.”
He highlighted the challenges manufacturers encounter due to delays in export processes, which often result in products approaching their shelf life before they can be shipped.
“In some cases, you have some of our products nearing their shelf life before we proceed to export because of the processes that surround export documentation, inspection, and delays that come with it.
“So, we are not able to get the kind of efficiency that is required for you to competitively export, and that is very important in any environment. You cannot operate in a macroeconomic environment that is unconducive and expects that you will be able to grow your manufacturing and then be able to export,” he noted.
Ajayi-Kadir dismissed the notion that Nigerian products are inferior to imported ones, attributing this misconception to goods produced by unregulated operators.
“It is untrue that local products are inferior to imported ones. We have Nigerian standards, and our members adhere strictly to these. Without MANCAP (Mandatory Conformity Assessment Programme), you cannot manufacture or sell your products in the market,” the MAN DG said.
He pointed out that regulated Nigerian manufacturers create products that adhere to globally accepted standards, asserting that any opposing view is misguided.
“There are Nigerian standards that are acceptable and compare favourably with international standards. So, it beats me how one would say Nigerian products are inferior,” Ajayi-Kadir asserted.
Despite the quality of locally produced goods, he noted that high production costs hinder Nigerian manufacturers from competing with imported products, which often originate from lower-cost environments.
Ajayi-Kadir explained that while factors like consumer preference, price, and quality influence competitiveness, price has recently become the most critical factor due to the declining purchasing power of Nigerians.
“The average Nigerian will obey the law of his pocket by simply going for the cheaper option. Imported goods often come from low-cost environments and, in some cases, evade taxes, making them cheaper,” he explained.
The MAN DG stated that the group had invested in advocacy and had engagements with the Federal Government on initiatives aimed at improving the operating environment.
He recognized the Federal Government’s initiatives, such as the Accelerated Stabilisation and Advancement Plan and recent fiscal and tax policy reforms, but stressed that additional measures are required.
“There are some positive measures, like the withholding tax implementation, which is a welcome development. However, with issues such as the astronomical increase in the cost of power, no manufacturer can competitively produce in that kind of environment. We have indicated that a 100 per cent increase will have been tolerable. And this is for power that is inefficiently generated and run.
“Again, there is the continuous increase in interest rates, which has made borrowing for working capital and capital goods difficult. There is no way a manufacturer can borrow at 32, 35, or 40 per cent, and be able to produce and make a profit.
“What will you produce? Except you are producing cocaine. So, all of this tends to make the good policies of the government not to gain traction and then be able to deliver as the government would have been able to achieve,” he stated.
