The number of companies which shut down in Nigeria within just three years has been revealed and it will stun you. The Nigerian Chambers of Commerce has said that less than 800 companies closed shop in Nigeria between 2009 and 2011, due to the harsh operating business environment.
The companies that have survived are also having serious challenges as more than half of them have been classified as “ailing.’’
According to Reporters, this was disclosed by the President of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, Herbert Ajayi, on Tuesday, in Asaba, in a paper he presented at a zonal workshop on economic diversification organised by the Revenue Mobilisation Allocation and Fiscal Commission, RMAFC.
Mr. Ajay said the current situation of the “surviving” industries poses a great threat to the survival of the manufacturing industry. He added that capacity utilisation in industries hovers around 30 percent and 45 percent on the average, with 100 percent overhead costs.
He blamed the continued decline in the manufacturing sectors on “political and economic factors’’, citing poor infrastructure and epileptic power supply as key impediments to the industry.
The industrialist gave other reasons for the woes in the sector as incessant increase in the price of petroleum products used by industries, multiple taxation, unabated smuggling and inadequate access to finance, both local and abroad.
He said widespread insecurity and the inability of government agencies in the ports to meet their 24-hour target, for cargo clearance, have contributed to the dwindling fortunes in the manufacturing sector.
The NACCIMA president, whose speech was delivered by the Vice President of the association, Mary Iyasere, described current government policies to revive the manufacturing industry as inadequate.
“Notwithstanding this positive development arising from the reform process, the Nigerian economy, especially the manufacturing sector is still confronted by serious challenges, structural imbalance and lack of diversification,” he said.
“The current government policies targeted at the real sector (manufacturing) are also inadequate and preventing the manufacturing industry from flourishing,”
On the way forward, Mr. Ajayi stressed the need for the organised private sector to support the government’s efforts to revitalise the sector through the much-canvassed public private partnership.
He also called for more transparency in the ongoing government-led privatization exercise of public enterprises.
Quoting statistics from the Bureau of Public Enterprises (BPE), Mr. Ajayi said between 1999 and 2011, a total of 121 firms were privatized or commercialized, with about N250 billion realized from their sale.
The NACCIMA president, however, observed that the figures are in stark contrast to the position of the Senate ad-hoc Committee on Privatisation, which posited that 80 per cent of the firms is not performing.
In addition, he said Nigeria can borrow from the lessons of the economic policies of the “Asian Tigers” — Hong Kong, South Korea, Singapore and Taiwan — to boost the manufacturing sector.
He, however, warned that Nigeria must exercise
“This is because the casualty between growth and industrialisation could prove to be a costly mistake as seen in other countries, in pushing for rapid industrialisation,’’ Mr. Ajayi stated.