President Muhammadu Buhari’s move to get $29.96billion external loan has generated divergent views. While the Senate overwhelming voted against the loan proposal, some experts said accumulating more debts amid recession will worsen the crisis in the economy.
An economic expert, consultant on Small and Medium Enterprises (SMEs) sub-sector and public commentator on issues concerning SMEs and manufacturing in Nigeria, Mr. Pashcal Azike said getting $29.96billion external loan to tackle infrastructure deficit will not drive investments due to poor institutional framework, overbearing regulations and other prevailing anti business policies in the country.
If the Federal Government secures approval from the Senate to borrow $29.96billion from external sources, what do you think will be the economic implications, especially now that the economy is in recession?
And if there are no investors, especially SMEs, it means the whole effort and resources are wasted, while the economy remains in the doldrum. So, government must look inward to make the country more business friendly for both local and foreign entrepreneurs.
Also, with so much tension in the land, poor institutional framework, overbearing regulations and other prevailing anti business policies, it will be very difficult for investments to thrive, even with the best of infrastructure. I won’t support a venture that will mortgage the future of the country for the short term interest of political exigencies, while maintaining the status of policies that undermine local production.
Like others before it, this loan may well end up in financing white elephant projects.
Some economists and manufacturers are calling on government to tackle exchange rate problem and declining value of the naira before going for external loan. What is your take on this?
The economic recession currently pervading the country has thrown up myriad of issues bothering on finding quick fixes out of the doldrum. In the face of dwindling dollar income from oil sale and low production in the home front, the government seems to have gone into a panic mode and have come up with a vice-grip foreign exchange controls policy perceived as an antidote to discourage dollar demand for imports.
In spite of this policy, the high demand for forex have not abated, rather ,low dollar supply created a gap that has led to an unprecedented devaluation of the naira in both the inter-bank and autonomous (black market) foreign exchange market.
The government idea of correcting this anomaly led the campaign for “buy made in Nigeria goods” launched with usual fanfare and pageantry, but suffice to say that this campaign is not novel to an average Nigerian who is abreast with past and contemporary managers of our affairs in this country.
How will buying made in Nigeria goods reduce the demand for forex to shore up the value of naira?
Industries involved in the manufacturing have had more than a rough time in the last one year and the major issue is lack of foreign exchange to run the plants.
This has reduced capacity utilisation to an all time low of less than 20 percent. Many have resorted to all manner of survival techniques including downsizing of the workforce, casualising and outright closures/relocation among other measures. This has thrown thousands into the already saturated unemployment market, as well as its ripple effects on other linkage businesses. It is in the midst of this prevailing distressing scenerio of the manufacturing industry that a government that rode to power on the basis of change, is again pushing the time worn out “buy made in Nigeria” campaign down our throats.
As a key player in the manufacturing sector, how do you see the campaign of buy made in Nigeria goods by government? Can it help in tackling the current recession?
I see it as an antithesis to the reality on ground where most companies expected to produce the so called made in Nigeria goods are almost comatose, resulting in non availability of the very goods we are urged to consume in the first place.
Some local manufacturers have been bidding for forex for upward of 10 months without success. The lamentation of the owner of Erisco foods and many in his shoes are still fresh in our memories regarding their helplessness in the midst of the prevailing situation. Yet, we are supposed to buy made in Nigeria tomato paste, cars and toothpicks. The question is, how do we produce made in Nigeria goods without the necessary inputs?
The current campaign for made in Nigeria goods tend to create an impression in the minds of a large section of the populace that such good exist where all inputs can be sourced locally. The fact remains that, there is basically nothing like made in Nigeria goods with no input from other countries.
90 percent of the goods produced by Nigeria manufacturers constitute raw materials imported with dollars. And there is basically nothing wrong with that, as no country is self sufficient in everything; after all, Nigeria exports crude oil to non producing countries for refining. The concept of value addition is a major driving force of manufacturing all over the world with its attendant ability to create jobs and contribution to national GDP, even with minimal local input.
Though the environment we operate in has not recognised and deemed the manufacturing sector as a key driver in economic survival of this country. Rather the sector has been seen as a casual past time of people who don’t know what to do with their money and have attracted unbridled hostility by the government it is meant to complement, through a myriad of harsh policies ranging from arbitrary multiple taxation, hostile regulations, poor infrastructure and energy supplies, encouraging anti-trust and monopolistic tendencies of a few multinationals.
successive governments over the years have systematically reduced the capacity of Nigerian manufacturing business to a mere footnote in their development agenda. As a result, our industries have not grown beyond the rudiments of value addition, such that most of our pharmaceutical companies’ operations haven’t gone beyond simple tabletting and syrupping.
Nigerians will buy our goods if manufacturing is recognised and given its pride of place. As government is asking us to look inward, they too need a complete policy reorientation and change of their contemptuous attitude towards local manufacturers.
Also the government should create a separate foreign exchange window for raw materials importation to address the prevailing scarcity and mitigate sky rocketing prices. I don’t agree with the position of reserving 60percent forex to manufacturers as recently proposed by the Central Bank , because from experience, such measures could be hijacked by privileged multinationals with vested interest.
In taking such decision, it needs to be realised that several key players in the manufacturing value chain have roles to play, such as suppliers, indenting companies and buying agents. Effort should be directed at nurturing, promoting and preserving Nigerian SMEs willing to go into manufacturing and stimulate their capacity to produce the much desired made in Nigeria goods. Only then can the rhetoric of buy made in Nigeria fully translate to tangible achievement for the benefit of all of us.
An economic expert, consultant on Small and Medium Enterprises (SMEs) sub-sector and public commentator on issues concerning SMEs and manufacturing in Nigeria, Mr. Pashcal Azike said getting $29.96billion external loan to tackle infrastructure deficit will not drive investments due to poor institutional framework, overbearing regulations and other prevailing anti business policies in the country.
If the Federal Government secures approval from the Senate to borrow $29.96billion from external sources, what do you think will be the economic implications, especially now that the economy is in recession?
And if there are no investors, especially SMEs, it means the whole effort and resources are wasted, while the economy remains in the doldrum. So, government must look inward to make the country more business friendly for both local and foreign entrepreneurs.
Also, with so much tension in the land, poor institutional framework, overbearing regulations and other prevailing anti business policies, it will be very difficult for investments to thrive, even with the best of infrastructure. I won’t support a venture that will mortgage the future of the country for the short term interest of political exigencies, while maintaining the status of policies that undermine local production.
Like others before it, this loan may well end up in financing white elephant projects.
Some economists and manufacturers are calling on government to tackle exchange rate problem and declining value of the naira before going for external loan. What is your take on this?
The economic recession currently pervading the country has thrown up myriad of issues bothering on finding quick fixes out of the doldrum. In the face of dwindling dollar income from oil sale and low production in the home front, the government seems to have gone into a panic mode and have come up with a vice-grip foreign exchange controls policy perceived as an antidote to discourage dollar demand for imports.
In spite of this policy, the high demand for forex have not abated, rather ,low dollar supply created a gap that has led to an unprecedented devaluation of the naira in both the inter-bank and autonomous (black market) foreign exchange market.
The government idea of correcting this anomaly led the campaign for “buy made in Nigeria goods” launched with usual fanfare and pageantry, but suffice to say that this campaign is not novel to an average Nigerian who is abreast with past and contemporary managers of our affairs in this country.
How will buying made in Nigeria goods reduce the demand for forex to shore up the value of naira?
Industries involved in the manufacturing have had more than a rough time in the last one year and the major issue is lack of foreign exchange to run the plants.
This has reduced capacity utilisation to an all time low of less than 20 percent. Many have resorted to all manner of survival techniques including downsizing of the workforce, casualising and outright closures/relocation among other measures. This has thrown thousands into the already saturated unemployment market, as well as its ripple effects on other linkage businesses. It is in the midst of this prevailing distressing scenerio of the manufacturing industry that a government that rode to power on the basis of change, is again pushing the time worn out “buy made in Nigeria” campaign down our throats.
As a key player in the manufacturing sector, how do you see the campaign of buy made in Nigeria goods by government? Can it help in tackling the current recession?
I see it as an antithesis to the reality on ground where most companies expected to produce the so called made in Nigeria goods are almost comatose, resulting in non availability of the very goods we are urged to consume in the first place.
Some local manufacturers have been bidding for forex for upward of 10 months without success. The lamentation of the owner of Erisco foods and many in his shoes are still fresh in our memories regarding their helplessness in the midst of the prevailing situation. Yet, we are supposed to buy made in Nigeria tomato paste, cars and toothpicks. The question is, how do we produce made in Nigeria goods without the necessary inputs?
The current campaign for made in Nigeria goods tend to create an impression in the minds of a large section of the populace that such good exist where all inputs can be sourced locally. The fact remains that, there is basically nothing like made in Nigeria goods with no input from other countries.
90 percent of the goods produced by Nigeria manufacturers constitute raw materials imported with dollars. And there is basically nothing wrong with that, as no country is self sufficient in everything; after all, Nigeria exports crude oil to non producing countries for refining. The concept of value addition is a major driving force of manufacturing all over the world with its attendant ability to create jobs and contribution to national GDP, even with minimal local input.
Though the environment we operate in has not recognised and deemed the manufacturing sector as a key driver in economic survival of this country. Rather the sector has been seen as a casual past time of people who don’t know what to do with their money and have attracted unbridled hostility by the government it is meant to complement, through a myriad of harsh policies ranging from arbitrary multiple taxation, hostile regulations, poor infrastructure and energy supplies, encouraging anti-trust and monopolistic tendencies of a few multinationals.
successive governments over the years have systematically reduced the capacity of Nigerian manufacturing business to a mere footnote in their development agenda. As a result, our industries have not grown beyond the rudiments of value addition, such that most of our pharmaceutical companies’ operations haven’t gone beyond simple tabletting and syrupping.
Nigerians will buy our goods if manufacturing is recognised and given its pride of place. As government is asking us to look inward, they too need a complete policy reorientation and change of their contemptuous attitude towards local manufacturers.
Also the government should create a separate foreign exchange window for raw materials importation to address the prevailing scarcity and mitigate sky rocketing prices. I don’t agree with the position of reserving 60percent forex to manufacturers as recently proposed by the Central Bank , because from experience, such measures could be hijacked by privileged multinationals with vested interest.
In taking such decision, it needs to be realised that several key players in the manufacturing value chain have roles to play, such as suppliers, indenting companies and buying agents. Effort should be directed at nurturing, promoting and preserving Nigerian SMEs willing to go into manufacturing and stimulate their capacity to produce the much desired made in Nigeria goods. Only then can the rhetoric of buy made in Nigeria fully translate to tangible achievement for the benefit of all of us.
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