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The
manufacturing sector is fraught with many problems which has stifled
the sector from contributing to the growth of the economy.

According to the
director general of the Manufacturers Association of Nigeria (MAN),
Jide Mike, an enabling environment needs to be created for the
manufacturing sector to thrive.

Speaking yesterday
in Abuja at the investment forum of technology exposition ( Techno-Expo
2011), he said the dismal performance of the manufacturing sector was
due to the high cost of operating business, among other factors.

He identified the
cost of challenges faced by manufacturers to include high operational
costs in the area of alternative sources of power generation such as
gas, diesel, and LPFO, cost of fund as a result of high interest rate,
lack of long term loans, and inadequate operational fund for the Bank
of Industry.

Other challenges include high cost of infrastructure, such as energy, transportation, mobile telephones, and internet tariffs.

On taxation, Mr.
Mike said, “the case of multiplicity of taxes among the three tiers of
government is a great problem to the manufacturing sector, and indeed
to all other business concerns.”

Multiple taxation

According to him,
recent research carried out by MAN in conjunction with Centre for
International Private Enterprise, Washington, USA, shows that over 100
taxes and levies are currently being charged by the three tiers of
government in Lagos, Oyo, and Ogun States, as against the 38 legally
approved.

He noted that while
many nations operating tax business friendly environment are further
reducing the number and rates of taxes as part of the economic stimulus
package, the reverse is the case in Nigeria.

“Charges by
concessionaries and the high cost of administering the recently
introduced cargo track note by the Nigerian Port Authority and the
aggregate of all the above put the country’s manufacturing costing as
much as 45 per cent higher than world averages. The locally made
textile products are more prone to this phenomenon,” Mr. Mike said.

Other experts at the expo said developing industrial cluster will boost the manufacturing sector in Nigeria.

Olufemi Bamiro,
vice chancellor of the University of Ibadan, in his address, said there
are thousands of clusters around the world including the highly
celebrated Silicon Valley information technology cluster of the United
States of America, and in Nigeria, the Nnewi industrial cluster in
Anambra State and the Otigba ICT cluster in Lagos.

He said several
clusters have been identified in Nigeria, particularly by Raw Materials
Research and Development Council (RMRDC) in the areas of textile,
furniture, leather, agro raw materials processing, metal working,
mineral processing, among others, noting that clustering has become a
powerful weapon to face competition – local or global.

Cluster initiative

According to him, it is increasingly becoming one of the key drivers of economic growth in localities, cities, and regions.

“Consequently, most
nations are engaged in mapping and evolving appropriate cluster
initiatives aimed at transforming them into innovative clusters,” Mr.
Bamiro noted.

He said that in the
developed and some developing economies, the cluster initiative has
become a central feature of industrial planning aimed at improving
growth and competitiveness.

“The main thrust of
cluster initiatives/policy is not to create cluster from scratch but,
most importantly, how to help existing clusters to develop and
transform into innovative clusters. This is particularly important in
the Nigerian setting with several calls for the replication of the
Nnewi phenomenon in other places in the country,” he said.

He said increased
expertise provides sourcing companies with a greater depth to their
supply chain and allows for inter-firm learning and co-operation, which
offer a wide range of benefits to both business and the wider economy.