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2010: Mixed Grill For Nigeria’s Manufacturing Sector

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From all indications, Nigeria’s manufacturing sector has recorded some improvement last year due to a number of reforms initiated by the Federal Government.

The Manufacturers Association of Nigeria (MAN) says that macroeconomic indicators in 2009 showed that the country’s Gross Domestic Products (GDP) grew by 7.0 per cent in the third quarter of  last year, compared with 6.13 per cent in 2008.

The association says the growth was driven mainly by the non-oil sector, particularly agriculture, which accounted for 45.35 per cent of the GDP.

Industry operators attribute the feat to the latest round of Central Bank’s banking reform programme, which started in August 2009, saying that the reform has impacted positively on the manufacturing sector in 2010.

They also note that the Federal Government’s Power Sector Reform Programme, aimed at fully liberalising power generation and distribution, has also boosted production in the manufacturing sector.

They say that the two reforms, if well implemented, are capable of reviving manufacturing activities and the national economy, while aiding the fulfillment of the Federal Government’s Vision 20:2020, aimed at making Nigeria one of the top 20 industrialised countries in the world by 2020.

MAN, at its last annual general meeting, described the latest banking reforms as “timely, creative and critically beyond the teachings of liberal economic theory where the primary role of the central bank is macroeconomic stability and to ensure a stable banking sector’’.

The immediate-past President of MAN, Alhaji Bashir Borodo, conceded that it was rare for the CBN to initiate such initiatives to redeem the real sector of the economy directly, adding that such tasks often fell within the exclusive preserve of politicians, ministers of finance or national planning.

He noted that the World Bank and the International Monetary Fund (IMF) often viewed developing countries’ efforts to inject funds to prop up the real sector of their economies with scorn.

Borodo said that the banking reforms had a three-stage process which was first of its kind in any developing country, adding that the first involved the restructuring of existing short-term, high-interest loans into long-term loans with a low interest of seven per cent per annum.

Under this requirement, banks are expected to give loans to the real sector, using at least 50 per cent of funds received from the Bank of Industry (BOI), while the CBN guarantees loans given to

manufacturers and SMEs under the Medium Enterprises Credit Guarantee Scheme.

“We believe this bold initiative by the CBN will set the standards for monetary intervention in the real sector and will ultimately define the relationship existing between the banking sector and the real sector,’’ Borodo said.

The MAN chief, however, said that for the manufacturing sector, there had been “growing challenges’’, induced mainly by the economic environment of the country.

Industry watchers, nonetheless, commend the Federal Government for approving N150 billion for the manufacturing sector and N100 billion for the textiles sector, out of which N30 billion has already been disbursed through the Bank of Industry (BOI).

In spite of the intervention, experts say that many challenges are still confronting the manufacturing sector, stressing that a major limitation was the country’s energy crisis.

However, the Federal Government is not unmindful of the energy constraints, as it has repeatedly pledged to make electricity more available by 2012 via its power reform programme.

On August 26, for instance, President Goodluck Jonathan launched the roadmap to power sector’s reform, in which Federal Government is expected to sell off its 51 stake in electricity distribution companies and thermal power stations to private investors.

Under the new arrangement, however, the Federal Government will still own the transmission grid but the facility will be managed by private sector operators.

Prof. Barth Nnaji, the Chairman of the Presidential Taskforce on Power Issues, said that the Federal Government was working hard to ensure that some of the electricity companies were sold before the expiration of the administration’s tenure.

The measures notwithstanding, economic analysts contend that the limitations of the manufacturing sector include inconsistent government policies, poor infrastructure, multiple taxation, smuggling and importation of substandard goods.

They also criticise the new Federal Government policy lifting the ban on imported products such as textiles and fabrics, toothpicks and beverages, while extending the age of imported second-hand vehicles to 15 years.

The Minister of Finance, Mr Olusegun Aganga, who unveiled the new policy, defended it as a strategy aimed at encouraging Nigerian importers to use the country’s seaports for imports to generate revenue for the government and discourage smuggling of vehicles in particular.

However, Mr Jaiyeola Olanrewaju, the Director-General of the Nigerian Textiles Manufacturers Association (NTMA), said that the textile sector did not perform well in 2010.

He, nonetheless, said that some textile producers were able to have access to N30 billion, out of the N100 billion which the Federal Government gave to BOI for the development of the textile sector.

Olanrewaju bemoaned the state of Nigeria’s infrastructure, deploring the dismal state of the country’s energy situation in particular.

“Unless the power situation is improved, our industries cannot produce competitively, as imported items will continue to be cheaper than locally produced products,’’ he said.

The NTMA chief stressed that no country could develop without a productive industrial base which was hinged on regular electricity supply.

He described the new government policy lifting the ban on imported items, including textiles, as “absurd’’, particularly when locally produced fabrics could not compete with the foreign ones.

“Stakeholders believe that the ban should be maintained until the operating environment is conducive enough, as most of our textile products cannot compete with imported ones because of high costs of production,’’ he said.

Olanrewaju said that it was incongruous for the government that was struggling to ensure the revival of the country’s ailing industries to initiate such a policy that could provoke the closure of more industries and worsen the unemployment situation.

He wondered how textiles manufacturers would be able to pay back the loans they got from BOI if they were unable to produce and sell fabrics because of the new policy.

“It means the government will have to take over the factories sooner or later when they cannot meet their obligations to the bank,’’ he said.

Olanrewaju identified some of the problems plaguing the sector as poor electricity supply, prohibitive costs of diesel, gas and transportation, as well as bad roads.

Apart from textile manufacturers, other industrialists have bemoaned the government policy relaxing the import restrictions placed on certain manufactured goods.

They argue that the country would soon become a dumping ground for substandard products, stressing that the Federal Government must reverse the policy which, they say, is inimical to the growth of the manufacturing sector.

Alhaji Amuda Obelawo, the Chief Executive Officer of LOPIN Industries, identified the influx of substandard goods into Nigeria as the bane of the country’s industrial development.

Obelawo, who made the observation during a recent inspection of one of his factories by the Standards Organisation of Nigeria (SON), stressed that the importation of poor quality goods would thwart efforts to foster the country’s economic development.

“Government should stop the production and importation of substandard products because the buyers are just being hoodwinked to buy products that are not durable.”

“The proliferation of substandard products in our markets is affecting the national economy and is posing serious threats to the survival of indigenous companies.

“The government is also responsible for the problem because its agencies do not buy ‘Made-in-Nigeria’ products and quality goods because of selfish gains,’’ he said.

Obelawo alleged that many contractors handling federal, state and local government contracts were fond of using fake products in the projects, adding: “That is why we often see new buildings collapse.”

Still on the Federal Government policy, Dr David Obi, a member of MAN’s executive council, stressed that the lifting of the ban on the importation of certain categories of second-hand vehicles was an example of policy inconsistency.

Obi, who is also a member of the governing council of the National Automotive Council (NAC), urged the Federal Government to rescind its policy that increased the age of imported vehicles to 15 years, saying it would cause more harm than good.

He said that such a policy was a disincentive to some automobile companies itching to establish vehicle assembly plants in Nigeria, adding that such plants would also create more employment in the country.

Obi urged Nigeria to take a cue from China, a country which started the development of its automotive industry instead of relying on cheaper alternatives offered via the importation of used vehicles.

“In fact, China was offered thousands of used vehicles free of charge by Japan some years ago but China turned down the offer because it would interfere with plans to build its own automotive industry.”

“Nigeria now wants scraps to be brought into the country as vehicles without regard for the development of its automotive industry,’’ he said.

Obi stressed that the Federal Government ought to protect and nurture the development of the country’s automotive industry, urging it to learn lessons from the U.S. government which had always protected the country’s steel industry against unfair competition.

Reacting to the criticisms of the policy, Alhaji Jubril Martins-Kuye, the Minister of Commerce and Industry, said that the new policy on importation of used vehicles was not just to earn more revenue for government but also to make more vehicles available for the citizens.

He noted that neighbouring countries, such as Benin Republic and Togo, had 15 years as the age-limit for imported used vehicles, adding: “Somehow, these vehicles find their way to Nigeria through smuggling.

“And since the vehicles are smuggled into Nigeria, the Federal Government loses the revenue that should normally accrue to it and this is what we want to stop,’’ he said.

Besides, Martins-Kuye stressed that government only lifted the ban on those textiles that were not produced in the country, saying: “We only unbanned the importation of goods, including textiles, that we are not produced locally.’’

The minister pledged the Federal Government’s commitment to promoting Nigeria’s industrialisation, and explained why it had placed appreciable emphasis on the power sector’s reform, so as to make the country more investment-friendly.

All the same, industrialists have been commending the campaign to promote increased patronage of Made-in-Nigeria products, which started in August 2009, as a tonic that would boost the development of the manufacturing sector.

They, nonetheless, insist that the government should make concerted efforts to tackle the country’s energy crisis, saying that the achievement of a stable power supply in the country would play a pivotal role in transforming the national economy.

The experts also urge the government to provide low-interest credit facilities for manufacturers and reduce taxations on manufactured goods, while raising the duties payable on imported items to encourage local production.

All said and done, the experts believe that the development prospects for the manufacturing sector are quite bright in 2010.

 

Grace Yusuf

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Nigeria’s ETF correction deepens as STANBICETF30, VETGRIF30 see 50% decline in a week

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Nigeria directs all oil, gas revenues to federation account in sweeping reform
Nigerian President Bola Tinubu has signed an order directing that all oil and gas revenues owed to the government be paid directly into the federation account, in sweeping reforms aimed at boosting public finances, the presidency said on Wednesday.
Under the law, the Nigerian National Petroleum Corporation keeps 30% of oil and gas profits for frontier exploration in inland basins. The presidency said those funds will now be paid into the federation account and appropriated by the government.
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NNPC also retains 30% of oil and gas sales as operational costs and receives 30% of proceeds from Production Sharing Contracts. Under the new directive, all revenues under these arrangements will flow directly to the federation account, while the company will instead receive appropriated management fees.
Royalty payments, petroleum profit taxes and other statutory revenues previously collected and retained by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will also be paid directly into the Federation Account. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) will likewise remit its revenues in full, with its cost of collection to be funded through appropriation.
Tinubu’s office said deductions enabled by the law had sharply reduced net oil inflows and contributed to fiscal strain across federal, state and local governments. The president also ordered a review of the law and established an implementation committee to enforce the changes.
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BOI Introduces Business Clinic 

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The Bank of Industry (BoI) has introduced a business clinic model designed to diagnose, treat and rehabilitate the Micro, Small and Medium Enterprises (MSMEs) to ensure long-term growth and sustainability.
The Divisional Head, Business Development, BoI, Dr Obaro Osah, made this known at the bank’s Thrive Summit with the theme: “Driving Growth through Innovation and Financial Empowerment” on Tuesday in Lagos.
Osah noted that traditional banking often treated businesses as mere account opening and management relationships.
He said the BoI business clinic model was created to reimagine the essence of a bank as a specialised teaching hospital.
According to him, just as a hospital requires a thorough diagnosis before service treatment/surgery, the bank must analyse the structural health of a small business before injecting capital.
“Financial distress is often just a symptom, the disease lies in operations and adopted philosophy, strategy, or governance,” he said.
Osah noted the many MSMEs, in spite of their potential, suffer from recurring ailments: restricted cash flow, poor operational structure, lack of proper packaging and market access, poor management among others.
He said the bank’s triage and vital signs included screening SMEs by maturity stage, pulse check to assess cash flow and liquidity and market temperature to evaluate competitive landscape.
Osah said after these evaluation, advanced diagnostics, prescriptions, surgical interventions and recovery and rehabilitation would be carried out where necessary.
“Prescription without diagnosis is malpractice and the Thrive Summit ensures we treat the root cause, not just the symptoms,” he said.
The Chief Strategy and Development Officer, BoI, Dr Isa Omagu, noted that MSMEs needed more than finance to succeed.
Omagu said they needed structure, advisory, capacity building, governance, digital readiness, access to market information and the right business infrastructure to operate and scale effectively.
He said as part of the bank’s 2025-2027 Corporate Strategy, the business clinic would expand BoI’s value proposition to broaden its products and services to better reach target segments.
Omagu said by offering structured business advisory and project development support, the clinic would enable the bank deliver deeper, more holistic value to MSMEs beyond financing.
“This vision of a structured, holistic business clinic; one that strengthens MSMEs across all core business functions and makes them more bankable, competitive, digitally enabled, and sustainable, is fully aligned with our strategic initiative to develop and roll out non-financial product offerings.
“Through this initiative, BoI commits to providing business advisory for MSMEs and project lifecycle support for enterprises, and the business clinic serves as the practical platform through which this commitment comes to life,” he said.
Omagu urged MSMEs to apply the guidance received to strengthen structure, governance, and financial management.
He added that they must adopt digital tools and improve internal processes to boost competitiveness while engaging BoI as a long-term partner in building a resilient, scalable business.
Mrs Eniola Akinsete, Divisional Head, Sustainability, BoI, said adopting Environmental, Social and Governance (ESG), principles often led to business prosperity.
Akinsete, however, noted that in spite of the benefits, adoption challenges persisted.
She affirmed BoI’s support on the adoption of ESG Practices by the MSMEs.
Earlier, the Executive Director, Corporate Finance, Sustainability and Investments, BoI, Mr Rotimi Akinde, said the summit represented a shared commitment to building a stronger, more resilient business ecosystem in Nigeria.
Akinde stated that the business clinic created a platform for practical knowledge sharing where entrepreneurs and small business owners could gain actionable insights to overcome challenges and seize opportunities.
He said discussions would focus on critical areas that drive sustainable growth, including branding and marketing, financials and activities, human rights, human resources, raising capital for equity and technology.
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Dangote signs $400 mln equipment deal with China’s XCMG to speed up refinery expansion

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Nigeria’s Dangote Group has signed a $400 million equipment deal with China’s Xuzhou Construction Machinery Group to speed up the expansion of its oil refinery toward a planned 1.4 million barrels per day, the company said on Tuesday.
The additional equipment is expected to support major projects under construction across refining, petrochemicals, agriculture and infrastructure.
Dangote said the XCMG agreement would allow it to acquire a wide range of new heavy-duty machinery to complement existing assets deployed for the refinery build?out, which the company expects to complete within three years.
As part of the expansion, polypropylene capacity will rise to 2.4 million tons per year from 900,000 tons. Urea production in Nigeria will triple to 9 million tons per year, alongside an existing 3 million-ton plant in Ethiopia, positioning the conglomerate as the world’s largest urea producer, the company said.
The output of linear alkyl benzene – a key raw material for detergents – will increase to 400,000 tons annually, making Dangote the biggest supplier in Africa. Additional base-oil capacity is also planned in the programme.
Dangote Group described the equipment deal as a strategic investment aligned with its ambition to become a $100 billion enterprise by 2030.
“The additional equipment we are acquiring under this partnership will significantly enhance execution across our projects,” it said in a statement.
Owned by Nigerian billionaire Aliko Dangote, the $20 billion refinery began operations in 2024 after years of delays. Once fully operational, it is expected to reduce Nigeria’s heavy dependence on imported refined fuel and reshape fuel supply across West and Central Africa.
Reporting by Isaac Anyaogu; Editing by Anil D’Silva
The Nigeria-Slovenia Chamber of Commerce on Thursday urged the Nigerian business community to explore business opportunities in Slovenia to widen their horizons.
The Tide source reports that the chamber made the call at its 2025 Last Quarter Business Forum held in Lagos State.
The forum is the chamber’s routine session aimed at informing businesses about the latest opportunities of mutual benefit between both countries, encouraging people to explore them to improve their livelihoods.
Speaking at the event, which was attended by businessmen and trade regulatory agencies, the Director-General of the Nigeria-Slovenia Chamber of Commerce, Mr Uche Udungwor, described the relationship between the two countries as a bilateral economy.
Udungwor said the body, established to build, promote and facilitate trade and investment activities between Nigeria and Slovenia, had positively impacted both nations.
He said the mandates of the chamber include: “To provide a forum representative of Nigeria and Slovenia’s interests for the development and improvement of commerce and industry between the two countries.
“Also, to create, promote and sustain broad exchanges and interactions in commercial, industrial and economic fields between the countries.
“To promote cooperation on technical and scientific innovations between institutions of the countries through the exchange of regular information on trade and investment opportunities.
“To advise members on opportunities, challenges, legislation or otherwise arising from the pursuit of trade between Nigeria and Slovenia, and to encourage the exchange of ideas and views on trade matters within the context of trade promotion between both countries.”
According to him, Slovenia’s major imports include organic chemicals, agro products such as cocoa beans, iron and steel/metal scraps, wood, and mineral fuels/petroleum products.
He said the trade balance between Slovenia and Nigeria is “not quite encouraging”, citing United Nations COMTRADE data indicating that Slovenia’s imports from Nigeria in 2022 amounted to $5.7 million.
Udungwor described the Republic of Slovenia, located in Central Europe with about 2.1 million inhabitants, as a promising business frontier for Nigerians.
He noted that the country features Alpine mountains, thick forests and a short Adriatic coastline.
“Slovenia, which borders Italy to the west, Austria to the north, Croatia to the south and southeast, and Hungary to the northeast, has a 2024 GDP of 72.49 billion dollars, a sound economy and a low-risk business environment.
“Slovenia has been a member of the European Union since 2004 and of the Schengen Group since 2007. It is also a member of the Organisation for Economic Co-operation and Development (OECD).
“Slovenia today is a stable, vibrant democracy that offers a stimulating business environment and represents a bridge between the Balkan, Central European and Western European countries.
“The Nigeria-Slovenia Chamber of Commerce is at your service to provide up-to-date information and advice about Slovenia’s economy, business opportunities, companies, products and services for the mutual benefit of all,” he said.
A participant, Mr Muyiwa Ajose, said his partnership with the chamber had bolstered his agro exports to Slovenia.
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