How priority investments in infrastructure, core industries will boost Nigeria’s economy: Dangote

*Aluko Dangote, President of Dangote Group, has highlighted strategies for making a ‘newly industrialised Nigeria within 10 years’ possible, urging authorities to set a clear-cut agenda

Isola Moses | ConsumerConnect

Aliko Dangote, business magnate and President/Chief Executive of Dangote Industries Limited (DIL), has identified priority investments in infrastructure and core industries among other recommendations, as vital panacea to boost Nigeria’s economy to its desired level among contemporary countries, and in the wider world.

Against the background of the declining fortune of the manufacturing sector, the Africa’s wealthiest man urged the Federal Government to strategically prioritise investments in infrastructure to reverse the trend and boost the West African country’s economy to its desired level in the contemporary world.

In his address as Guest Speaker at the landmark 50th Annual General Meeting (AGM) of the Manufacturers Association of Nigeria (MAN) and 2nd Adeola Odutola Lecture held Tuesday, October 18, 2022, in Lagos, Alhaji Dangote expressed optimism that with the collective effort of all stakeholders, it is feasible to move Nigeria from “developing nation” to “newly industrialised nation”.

ConsumerConnect reports  the AGM with the theme, “An Agenda for Nigeria’s Industrialisation for the Next Decade”, witnessed the unveiling of a Blueprint for the Accelerated Development of Manufacturing in Nigeria 2.0.

The Group, in a statement, said Dangote noted it is imperative that the familiar challenges limiting the pace of industrialisation are frontally addressed while setting a clear-cut agenda for the next 10 years.

He also identified priority investments in infrastructure and core industries among other recommendations, as vital panacea to boost the Nigerian economy to its desired level among contemporary countries and the world over.

The foremost African entrepreneur also advocated jail terms for dealers in foreign textile materials in order to discourage imports and boost local production in the industry.

For legislative backup, Dangote sought the enactment of a law prohibiting the sale of imported fabrics in Nigeria.

He further identified various needed measures to enable Nigeria to speed up its industrialisation process and development growth.

According to Dangote, these measures included investment in infrastructure; creation of business-enabling policy framework; development of core industries; macroeconomic stability; facilitation of sectoral linkages and sustaining of the federal government’s recent efforts at ensuring security of lives, property, and investments across the West African country.

The business titan as well examined the performance of the industrial sector in Nigeria; identified the nexus between industrialisation and economic development with the country and China as case study, analysed the manufacturing sector in the country with focus on its growth trajectory, current status and challenges, and set an agenda for the next 10 years with an implementation roadmap.

He stated: “The experience in various parts of the world has shown that industrialisation drives economic growth and development, which improves living standards as evident by the high output and per capita income in industrialised countries.

“The rate of industrialisation in Nigeria has been slow as evidenced by the low contribution of manufacturing to GDP, poor capacity utilisation and constrained export of manufactured products within and outside the continent.”

The Dangote Group Chief disclosed that Nigeria’s share of world output of 0.41 percent, ranked 29th in the world which is unimpressive, considering its size and resource endowments.

He noted: “It ranks poorly, when compared with India at (3.1%), South Korea (3.0%) and China (28.7%).

“Nigeria’s industrialisation process has been greatly challenged by structural and institutional constraints, particularly funding.

“These factors have over the years cumulatively contributed to its disappointing performance.”

In the last decade, for instance, the average share of manufacturing value added to Gross Domestic Product (GDP) in countries, such as China and Malaysia, stood at 41% and 38% respectively; compared to 25% in Nigeria.

Capacity utilisation

Dangote stated: “In terms of capacity utilisation, a major performance indicator which reflects the ability of manufacturing companies to meet rising demand without increasing cost, Nigeria achieved a rate of 55% compared to 76% and 78% in China and South Africa respectively.”

He also revealed the country’s dwindling industrial performance has significant socio-economic implications, as poverty and unemployment continue to rise.

The President of Dangote Group said: “From 1960 to 2003, the development trajectory of China by far outpaced that of Nigeria within the same period even though Nigeria began on a seemingly better footing.

“It is therefore important to track back to where Nigeria ‘dropped the ball’ with a view to repositioning the country to the path of growth, development, and social uplift.

Experiences in Nigeria and China

“Based on the comparative analysis of Nigeria and China, one can safely make the following deductions (i) the numerical strength of a nation (population) can indeed be translated into economic wealth (ii) steady growth in manufacturing output is possible when the operating environment is conducive; (iii) no nation can easily transit from  ‘developing’ to ‘newly industrialised’ without a vibrant manufacturing sector; (iv) effective implementation of long term plans backed with policy consistency will promote enduring economic growth and development.”

He stated: “Nigeria’s manufacturing sector is dominated by light manufacturing with only a few firms operating in the heavy segment of the sector.”

Addressing factors hindering growth of manufacturing sector

“There are several factors that need to be in place to accelerate the growth of the manufacturing sector in Nigeria.

“These include: security and rule of law, industry-oriented government policy; adequate infrastructure; industry-oriented Research & Development (R&D); a well-developed SME sector; building of human capacity, and embrace of technology to improve efficiency through automation of manufacturing processes.”

Regarding the current status of the manufacturing sector, Dangote noted that manufacturing was singled out in the Nigerian Industrial Revolution Plan (NIRP) as the driver of industrialisation and economic growth.

Contribution to Nigeria’s GDP

“The contribution of manufacturing to Real GDP in Nigeria contrasts with what was obtained in countries like China (27.16% in 2019); Germany (19.11%); Japan (20.74%) and South Africa (13.53%).

To drive industrialisation and sustained economic growth in Nigeria, he suggested that it is important that deliberate manufacturing-specific policies should be designed to support production activities and address the perennial challenges of the sector.

“It is important to note that the current government policies, if fully implemented, are good enough to address most of the challenges we are now facing,” he said.

Among manufacturing challenges, Dangote identified acute shortage of foreign exchange (Forex), dearth of long-term funds, limited infrastructure, policy inconsistency/implementation/ enforcement, over-regulation, multiple and high taxes for the industries (the manufacturing sector is beset with over thirty statutory taxes, levies, fees, etc., charged at multiple tiers of government), and insecurity.

He said: “In consideration of the afore-mentioned challenges, there is an urgent need for a shift in policy approach and strategy to reposition the manufacturing sector for growth over the next ten years.

“It is imperative that the familiar challenges limiting the pace of industrialisation are frontally addressed while setting a clear-cut agenda for the next 10 years.”

While setting an agenda for the next 10 years, Dangote stated: “To achieve industrialisation goals, it is necessary for a nation to formulate plans and policies that will enhance and sustain industrial development.

“Sustainable industrial development involves establishment of a conducive environment to encourage investment and ensure efficient usage of resources to increase productivity and growth of the country.

“Nigeria needs to henceforth intensify efforts at promoting industrialisation with specific focus on the attainment of the following targets in the next 10 years: 15% manufacturing sector growth, 20% manufacturing contribution to GDP, 15% growth in export of manufactured products, 10% increase in the share of manufacturing to total export merchandise, stronger inter-industry linkage between SMEs and large corporations, improved manufacturing contribution to Government tax revenue and 20% increase in manufacturing employment.”

Dangote further noted that, “the drive to transform Nigerian into an industrialised nation has been a consistent goal of successive governments since independence.

“It is, therefore, imperative that we focus on sectors with great potential for inclusive growth. Sustainability must be central to our industrial development agenda.

“There is also the need for government (at all tiers) to ensure that they consult widely with relevant stakeholders when taking far reaching decisions on key sectors of the economy.

“This will make it much easier for manufacturers to make long-term business plans.”

Besides, he stated policies that have been “tried- and- tested” should be backed with an Act of parliament to give them legal backing and make them less susceptible to arbitrary changes by successive governments.

Dangote added: “Industrialisation, driven by manufacturing, has the capacity to facilitate enduring economic growth.

“The transition mechanism entails the availability of required resources, adoption of appropriate technology, provision of favourable operating environment, human capital development, stable macroeconomic environment and adequate infrastructure. “With the collective effort of all stakeholders, it is feasible to move Nigeria from ‘developing nation’ to ‘newly industrialised nation’ status within the next 10 years.”

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