If the proposed common passport by the African Union (AU) becomes a
reality, Nigeria may experience another round of exodus of industrial
firms to neighbouring countries where the cost of production is cheaper.
Specifically,
manufacturers decried the rising cost of production, noting that
overhead cost incurred in providing alternative infrastructure like
power is becoming unbearable for large and small-scale industrial firms
who do not have capacity to invest in gas generators.
With the
Automotive Gasoline Oil (AGO), known as diesel, which used to sell
between N110 to N130 per litre, now selling for N200 per litre,
manufacturers note that the cost of sustaining businesses through what
should be an alternative power supply is becoming unbearable.
Similarly,
capacity utilisation in the nation’s manufacturing sector continued to
drop from its low record of about 50 per cent following poor gas supply
to industrial layouts from Transmission Company of Nigeria.
Indeed,
the power sector in the last few weeks had been at the mercy of
militants who blew up gas facilities and further jeopardised the Federal
Government’s plan to add another 6000 Mega Watts (MW) by July.
Many
industrial firms, especially those operating in the food, beverages and
conglomerates sub-sector had about a decade ago, relocated to Ghana
after being offered incentives like 15-year tax holiday, free land and
other policy initiatives which would drive their businesses.
With
African Union pursuing a path of closer integration through the launch
of a common passport that will grant visa-free access to all 54-member
states as well as rising cost of power, the manufacturers noted that the
integration decision may see Nigerian firms exploring manufacturing
opportunities in other countries.
President, Manufacturers
Association of Nigeria (MAN), Dr. Frank Jacobs in a chat with The
Guardian, noted that the proposed union will facilitate free movement of
persons, goods and services around the continent, thus fostering
intra-Africa trade, integration and socio-economic development.
According
to him, the deal is good for the productive sector that is presently
troubled due to various challenges in the operating environment.
“The
absence of conducive manufacturing environment and basic infrastructure
would continue to draw back the sector, except something urgent is done
to reverse the situation. Power is a major cost for manufacturers and
they will explore opportunities where it is cheaper to produce their
goods.
“Conversion of diesel generators to gas is a viable
alternative but it is not cheap for small scale industries, while gas
supply has equally be hampered by continued destruction of oil and gas
facilities by militants,” Jacobs added.
Director-General of the
Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf noted that
businesses are being killed everyday through poor power supply and low
purchasing power from consumers.
According to him, many
manufacturers are wary of the economic integration agenda as it takes a
highly competitive environment to survive in an integrated economy.
“Businesses
are complaining. Petrol and diesel costs are unbearable at the current
rates. It is a suffocating situation and I hope the issues of ease of
doing business are addressed before opening markets to other economies,”
he added.
The World Bank had in its latest report on the ease of doing business ranked Nigeria low among other countries.
Nigeria, the World Bank observed, presently ranks 169 out of 189 countries examined for trade index for the year 2015.
Similarly,
a recent United States Department of Agriculture (USDA) review of the
agricultural situation in Benin, showed that: “Benin serves as a
delivery corridor for West Africa, reaching more than 100 million people
in the landlocked countries of Niger, Mali, Burkina Faso, Chad and the
Northern states of Nigeria.”
USDA observed: “Benin’s relatively
efficient port services and liberal trade policies mean it is an
important cog in the regional trade flows to nearby countries.”
The
report noted that improvements in the country’s port operations as well
as some small improvements in the ease of doing business over the past
years aided the flow of imports in the country.