Nigeria’s economy has enormous potential. This has also been an important attraction for local and international firms and investors. However, with the economy facing challenges in recent years, the prospect of technologically lifting the nation’s productivity faces challenges. Stakeholders have called for a functional development blueprint that will boost industrialisation and job growth.
An online dialogue to support industrialisation, innovation, inclusion and stability held last month. Organised by the Centre for Values in Leadership (CVL), a not-for-profit leadership development institute in Nigeria, it was meant to leapfrog economic development.
Themed “Downstream and upstream linkages in manufacturing”, it gathered experts to discuss challenges and opportunities for backward integration and how fostering entrepreneurship can have a positive impact on innovation, inclusion, and sustainable development.
The observation of the stakeholders was that Nigeria still needs to tackle several challenges to ensure a steady and sustainable growth path toward a modern industrialized economy.
CVL founder Prof Pat Utomi noted that there were many bad reasons why Nigeria has not been able to experience the transformation in its manufacturing potential. He noted that Nigeria has continued to have difficulty grooming local entrepreneurs and the growth of new firms following failure to adopt pragmatic innovation strategies as well as establishing and empowering appropriate institutions and policies.
Some businesses, he noted, contend with logistical difficulties, such as infrastructure challenges and the absence of clusters to support their business input requirements. He cited a series of mega-challenges faced by Nigeria, including the inability to foster economic growth, and improving security among others.
The way to meet these challenges, he noted, was by innovating. To increase the number of successful small firms, Utomi urged research institutes to collaborate with universities to provide commercialisation services, including assistance in marketing, finance, and competitive strategies.
He pointed to the example of China, which has made strong investments in research and development (R&D) to generate autonomous sources of innovation and growth.
He, however, lamented that Nigeria by contrast has neglected its infrastructure.
For Utomi, Nigeria needed to get back to basics if it is to assure its industrial revival is on course.
In his view, structural reforms, are critical to the nation’s continued development and increased competitiveness and should encompass domestic policies that promote infrastructure, trade and investment.
Utomi called for the revival of industrial clusters, adding such facilities spur economic growth because they provide
the benefits of collaboration, innovation, capital, workforce, and support services.
Around the world, he added that there were useful models of successful industrialisation case studies whose features Nigeria could assimilate.
The good news, according to a former Director-General, Federal Institute of Industrial Research Oshodi FIIRO, Prof. Gloria Elemo was that there have been positive steps in recent years to advance Nigeria’s industrialisation dream through research outcomes.
For its part, Mrs Elemo said FIIRO has supported incremental deepening and broadening of the capabilities of a localised cluster of producers and the development of new small businesses and start-ups.
In effect, she said this has, in turn, driven a wave of entrepreneurial growth in agro-processing and other industries.
While at the helm of affairs of FIIRO attention, she said was given considerably to small businesses engaging in agricultural food processing.
Elemo said FIIRO has been able to develop 25 different cassava products for food and industrial development, especially the much-celebrated cassava bread. She was particularly happy that Nigerians came to appreciate the 20 per cent inclusion of cassava flour in bread making.
At FIIRO, she added that entrepreneurs are generally provided with a crucial store of knowledge, technical know-how, and strategies for market development.
She noted, however, that a key challenge for the country was how to capitalise on research potential which abound across the country.
Since small and medium enterprises (SMEs) have been recognised as the key driving force of the country’s economic development, she said continued government support will help the sector maintain its position as the mainstay of the economy for years to come.
Therefore, the goal from now on to set the platform for industrial growth, she emphasised, was to build a culture and infrastructure for competitive funding of research in universities and research institutions.
But that was all the contributions. One time Executive Director, Raw Materials Research and Development Council and Chairperson, African Women Leaders Think Tank( AWLT), Dr Remi Aribisala, stressed the need for industry and academic alliance to capture the benefits of investments in research and development.
She noted that the manufacturing had pressing needs. One was improving the access to very early-stage capital for start-up firms and empowering them to explore economic development opportunities.
Due to intense working capital constraints, she said many small manufacturers were unable to make the upfront investments in upgraded technologies that could have positive returns.
Like the United States Small Business Administration, an American agency that provides support to entrepreneurs and small businesses, she urged for more support for Small and Medium Enterprise Development Agency (SMEDAN) to enable it to foster innovation and competitiveness at the local level and to increase synergies between stakeholders.
According to her, timely implementation of laws and policy consistency would boost the private sector confidence in investing in the economy.
The promotion of technological upgrading, Mrs Aribisala added was critical for SMEs to capture more value-added from participation in global value chains.
Policies in this area, she noted, should aim to support training and capacity building via skill development programmes and promote partnerships between SMEs that can develop or transfer technology, products, processes or management practices.
For retired Chairman, Nestle Nigeria Plc, Chief Olusegun Osunkeye, home-grown economic development will help to nurture the growth of small businesses. Besides, he noted that the manufacturing industry needed linkages back into the innovation and entrepreneur side of things.
Osunkeye said Nestlé’s dependence heavily on backward integration for its inputs helped to reduce dependence on foreign exchange and the potential challenges of fiscal policies that could hurt supply chain networks.
The consequence of it, according to him was the development of a Nestle outcropping scheme for indigenous farmers to supply maize, sorghum and soya beans in addition to the company’s farm production.
He explained that the company enrolled thousands of farmers in its backward integration programme, converting inputs into quality raw materials to meet expected standards.
Formerly an importer of raw materials, he maintained that Nestle now sources local inputs from over 41, 600 local farmers and processors across the country. This makes Nestlé Nigeria one of the local input content drivers, as it sources 80 per cent of the company’s inputs locally.
The major risks facing the economy, a past Executive Director, Manufacturers Association of Nigeria (MAN) Dr Uma Oke Eleazu, identified were mainly from domestic factors as a result of its high reliance on the oil and gas sector. Even though the government has enhanced its effort to develop other industries, he noted the role of the oil and gas sector in gross domestic product (GDP) growth, exports, and fiscal revenue remain high.
Eleazu, also the Managing Director of Smenet Africa Limited, noted that local governments have not been empowered to sustain entrepreneurship development.
A comprehensive industrialisation policy that would prioritise developmental efforts towards driving backward integration programmes and creating linkages for various value chains in the manufacturing industry, he added, would grow the economy.
He explained the need for a comprehensive and coherent industrial policy that would also encourage the SMEs sector while also scaling up the present administration’s ease of doing business mandate.
Eleazu maintained that public sector innovation, both regarding the development of new and improved services, as well as strategic policymaking, required a broader learning arena and broader citizen involvement.
He urged the government to partner with the private sector to accelerate the conversion of the state’s economic resources from traditional economic development activities to those focused on expanding knowledge-based jobs and making globally competitive businesses.
He emphasised that companies in the private sector were essential in transforming the economy.
He continued that a vibrant, innovative, high-value-added manufacturing sector is vital to the strength and competitiveness of the Nigerian economy; hence the state of the sector cannot be taken for granted.
On a policy level, he said the most significant need was for federal agencies to move beyond their restricted silos of activity to more collaboration with other agencies with similar objectives. The key areas for collaboration, he said, should be economic and industry policy.
Presently, he observed that policymakers have lost contact with the realities taking place within industries and their challenges.
Another objective, according to him, should be to expedite the transition of scientific findings into commercial products.
Eleazu expressed concern with every phase of higher education and research, adding that what the economy needed was a university system that is capable of producing entrepreneurs of the future.
A key weakness in the nation’s innovation system, he also noted was a gap in the ability to translate technologies invented in university, or national research laboratories into products manufactured at scale in the country.
As the economy faces increasing challenges, his recommendation was for the system to birth significantly stronger universities and for government agencies to act to ensure that industry could be fully successful.
Fundamentally, for him, and other panelists, the government lacks the institutional capacity to undertake an ongoing and comprehensive assessment of the nation’s manufacturing competitiveness. Thus, there was a need to generate sector-based assessments, based on understanding the industry structure and performance.
On the whole, the concerns of the panelists were that Nigeria has not done enough to improve its business climate by removing bureaucratic barriers and delaying factors.
Panelists agreed that one of the key challenges in embracing the economy is preparing the workforce for technology disruption and transformation.
