FG Asks Foreign Firms to Manufacture in Nigeria

By Kunle Aderinokun and Crusoe Osagie

Minister of Trade and Investment, Olusegun Aganga

Foreign companies benefiting from lucrative public sector contracts and the nation’s massive market will have to start setting up factories to manufacture some equipment in Nigeria.

Describing the initiative as industrial partnership, Minister of Trade and Investment, Dr. Olusegun Aganga, who visited THISDAY Monday , said government was currently implementing the initiative with various foreign companies.

“We have a programme we are working on, similar to what South Africa did… it is not the black empowerment, it is more about industrial partnership, where you have a company that is benefiting heavily from the system and you get them to invest in the local economy,” Aganga said.

He explained that an example of such partnership, which is already being implemented, was with General Electric (GE) from which Nigeria had procured locomotives and turbines.

“We bought our locomotives and turbines from GE, so the agreement we have with them is that they will come to Nigeria and start assembling locomotives and when they finish, we buy it from them; they come here and start assembling turbines and when they finish, we buy it from them. They call it company-to-country agreement but I call it industrial partnership,” the minister said.

Describing a similar agreement with Chinese construction company, CCECC, he said as part of the contract to build the Abuja-Kaduna railway line, government mandated the company to set up a factory where the accessories for trains would be manufactured.

He disclosed that this factory had already been set up in Idu, an industrial area in the Federal Capital Territory, Abuja.

“ZTE for example came to do the telecoms security system here and as part of that they are to build three centres of excellence on IT here in three of our universities, so it is part of the industrial partnership with ZTE,” he said.

He said the government had also approached Toyota and asked them to bring their manufacturing and assembling to Nigeria, with an assurance that the vehicles will be bought here.

“They have said that if we want them to come, we must develop a National Automobile Policy, which must be taken through the National Assembly and passed, as it was done in South Africa, to attract these investors to produce locally,” he said.

Also, as part of efforts to boost the flow of foreign and local investment into the nation’s economy, the Corporate Affairs Commission (CAC) has received a marching order from the Federal Government to deliver on the goal of completing the process of registering new companies in the country within 48 hours by the end of this month.

Noting the impediment which the difficulty of company registration poses to the process of investment enhancement, Aganga said the ultimate target for registration of new companies was actually 24 hours but on or before March 31, the Registrar General of CAC had been given an interim target of two days.

“We have embarked on a major investment climate reforms in the country. We want to improve the investment climate in the country and one step we have taken is to ensure convenience in the process of registration of companies. By the end of March, we target 48 hours for registration of new companies,” Aganga said.

Meanwhile, the minister also revealed the approval of the restructuring of the Bank of Industry (BoI) by the president in order to sharpen the industrial sector’s specialised financial institution. This, he said, is to meet contemporary challenges of financing the non-oil sector of the economy in order to achieve the country’s objective of a diversified economy.

“The Bureau of Public Enterprises (BPE) is working on the restructuring of the Bank of Industry to make it bigger, so that it will have more funds to invest and be able to meet its mandates and objective. So we are looking at different alternatives. It is currently owned entirely by government. So in the restructuring, these may be areas that would be looked into,” the minister said.

Describing the reforms in the investment climate, which is being carried out, he said the ministry was embarking on a serious drive to rid the country of fake and substandard products, which he said was the reason why he was accompanied on the visit by the Director General of Standards Organisation of Nigeria (SON), Dr. Joseph Odumodu.

After commending the efforts so far made by SON, he said more efforts would be made by the standards agency to remove illicit products, which find their way into the country illegally and undercut the market opportunities for legitimate products. “When the SON DG came on, he gave me alarming statistics for the volume of fake and substandard products imported into the country of about 85 per cent and although the figure has now come down to a little less than 70 per cent, I have charged him to bring the figure down much more to check the damage that these illicit goods are doing to our economy and our people,” he said.

Aganga identified other factors that encumber the nation’s economy as lack of patronage of locally manufactured products, explaining that “if as a country we fail to patronise local producers, then we only aggravate the socio-economic challenges such as unemployment by simply using our market to create transfer job opportunities to other countries”.

“Even if our local producers have not yet attained perfection in their production process, we need to patronise them both in the government circles and in the private sector, in order to provide them the opportunity to improve their expertise. They are our products and we have to use them and support them to grow,” he added.

He identified other setbacks to industrial development which his ministry was making serious efforts to tackle to include infrastructure and hinted that to address the power issue, which is the major infrastructure problem facing producers, by the end of the year electrical power will go directly to the industrial sector.
He, however, added that before that happened government was working on a rebate to be given to manufacturers and producers to ameliorate the extra cost of power.

Noting that lack of access to affordable financing was also a major investment inhibitor the government was working to resolve, Aganga said one step being taken to deal with the issue of easy access to finance in the real sector was the restructuring and recapitalisation of the BoI.

“Ninety-five per cent of BoI lending goes to Small and Medium Enterprises (SMEs), so an improvement of finance available to the institution for onward lending to SME’s will ultimately make major impact on the government’s objective of creating jobs,” he explained.

He said government was also looking at the venture capital option of funding for SMEs, noting that funding with debt alone might not be able to help the nation’s SMEs to the desired growth levels.
He added that for the rural industrial sector financing gap would also be tackled.