Industrialists say FG procurement policy key to industrial breakthrough
Innoson and Bobtrack say Nigeria is at the brink of industrial breakthrough if the Federal Government gets its procurement policy right and closes the importation window for five years.
Nigeria is said to be at the brink of industrial breakthrough as soon as the Federal Government could just get its procurement policy right. Industrial giants east of Nigeria told BusinessDay in Port Harcourt on Friday that over 5,000 jobs would be created by only two manufacturers should the FG buy their products and close the importation window for just five years.
Enugu-based Innocent Chukwuma, CEO of Innoson Vehicle Motors (IVM) Limited, and Port Harcourt-based Ibifiri Bobmanuel, CEO of Bobtrack Tractor Limited, said at the weekend that the world, especially America and China, would marvel at what Nigeria would roll out soon if the FG could get its procurement policy right. While Bobmanuel, President of the Rivers State Entrepreneurs and Investment Forum (REIF), wants the FG to apply protectionist measures to allow local manufacturing to take root, Chukwuma wants the FG to use its procurement powers to boost local manufacturing.
Chukwuma spoke in a three-minute presentation at a legislative breakfast forum at the National Assembly which featured leaders of industries and heads of government arms. He said Nigerians must agree that for Nigeria to industrialise, government procurement must become one of the strongest instruments for achieving that goal. “Our experience has shown that Nigerian businesses can compete, innovate and create jobs when supported by the right policies. Making it easier to do business is not only about reducing regulations; it is also about creating markets for Nigerian businesses,” he said.
He named key measures: making all government agencies seek products in Nigeria before taking orders abroad; measuring compliance because “what gets measured gets implemented”; and creating predictable demand by establishing a national government fleet procurement framework that provides predictable demand for Nigerian manufacturers. “This will encourage investment, expand production capacity, deepen local supply chains and create more jobs for Nigerians,” he said.
On his own, Bobmanuel said America and China would be scared should Nigeria be freed to compete. He said Nigeria is doing very well in rice production, palm oil, vehicle manufacturing and tractors. He said the FG got it right with deregulation but has slumped by opening its doors for dumping, therefore threatening billions of naira in investments by local producers.
Bobmanuel said importation of thousands of tractors takes thousands of jobs away from Nigerians, including technology transfer that suffers. He said most Nigerian manufacturers took loans to invest because they saw the market, warning that changing the rules to open the doors for importation would force manufacturers to join the importation business. He said his understanding was that the FG wanted to bring down prices of foodstuff, especially rice, but said the Government would have called the rice processors to a meeting to find out how to help them bring down prices through strategic subsidisation for a period. He said the fear of election must not be made to be higher than fear of destroying local capacities.
The call for procurement reform echoes decades of debate about how to jumpstart Nigeria’s manufacturing sector. The 1980s protectionist policies and the 2010s automotive policy both sought to promote local manufacturing with mixed results. The difference this time is that local manufacturers like Innoson and Bobtrack have demonstrated they can produce competitive products if given the opportunity. The question is whether the government will provide the policy support they need.
The winners: Nigerian manufacturers, who would gain from procurement reforms; Nigerian workers, who would gain from job creation; and the Nigerian economy, which would benefit from industrialisation. The losers: importers, who would lose market share; and foreign manufacturers, who would face competition from Nigerian products.
Bottom Line: Nigeria’s industrialists say the country is at the brink of a breakthrough. The missing piece is government procurement policy. The question is whether the government will buy local or continue to buy foreign.