Nigeria’s economy: Starved of industry, misplaced opportunity (2)
BY SUNNY CHUBA NWACHUKWU.
Industrialisation is an effective economic tool and means to exploit the real sector and other business endeavours by investors, for both government outfits and private enterprise. It is the ultimate pathfinder that succinctly identifies the matching key towards facilitating and actualizing sustainable economic growth in every forward-looking economy based on undisputed, time-tested fact as contained in the statement, that “the economic strength and viability of any system is assessed by the strength of its manufacturing foundation.” This supports the business growth strategy of delegating occupational responsibilities and duties solely to entrepreneurs in the private sector, who professionally drive economic development through the machinery of small and medium scale enterprises (SMEs) that are well regarded as the engine block of any economy.
Indorama Eleme Petrochemicals Limited (IEPL) in Rivers State represents a good reference on the impact of industries and their economic contributions to an economy. IEPL used to be a subsidiary of Nigerian National Petroleum Corporation (NNPC), and it was known as the Eleme Petrochemicals Company Limited (EPCL). It was very poorly managed to the extent that it became completely grounded under the NNPC. It completely stopped operation due to lack of availability of spare parts and frequent equipment breakdown. The state of the art olefins plant that was producing a range of poly-ethylene/butene and poly-propylene products (LDPE, HDPE and HDPP) was then acquired and privatised in August 2006 by the Indorama Group as core investor.
By changing the ownership status of EPCL to a private sector driven investment, its economic transformative performances automatically altered and drastically changed for better. Through private sector involvement, this formerly mismanaged investment was fully recovered with adequate maintenance of the plants, which is vital in maintaining its healthiness for the smooth running of the manufacturing operations. It now stands out as a successful public-private-partnership (PPP) model in the nation’s privatisation programme, contributing positively and competitively to the overall gross domestic product (GDP) growth of the economy. It caters for the domestic demands of the growing plastic processing industries, as well as exports to many countries, including Asia, Europe and the United States of America. It has also placed the nation in the global polymer map and plastic value chain as a leading supplier of poly-olefins.
In almost every economic sector value addition on products means a whole lot to productivity (the GDP contribution to the economy). This can be achieved through innovative and competitive strategies that constantly advance total quality management (TQM) techniques that are applied for macroeconomic improvement, business efficiency and economic advancement within the economy. Private sector driven investments (as demonstrated by the IEPL), even some foreign government-owned corporations (using some international oil companies (IOCs) in the oil industry as examples), the likes of ADNOC in the United Arab Emirate (UAE), GAZPROM of Russia, SAUDI ARAMCO of Saudi Arabia, and the PETROBRAS of Brazil; Nigeria’s NNPC being exceptional, unless the NNPC Limited, newly registered at the Corporate Affairs Commission (to operate as a fully profit oriented entity as empowered by the Petroleum Industry Act) shall perform otherwise beginning from 19th July 2022.
Already, from the TQM principles, the IEPL consistently insists on total customer satisfaction by supplying high quality products. They also apply competitive pricing and technological capabilities, with ever growing readiness to steadily provide high quality grades of HDPE and LDPE products; which in the real sense has earned them the overwhelming market share (82 percent of the domestic market) they control, a clear indication of the strength of the relationship they have succeeded in building with their domestic customers. The benefits to the economy have also been seen in the areas of employment generation, government revenue earnings through taxation and related levies; wealth creation amongst the entire stakeholders along the products’ value chain, all of which are corporate economic benefits to the economy; but also are the corporate social responsibility (CSR) activities it carries out for the communities in its area of operation.
From the performances of the listed state-owned IOCs and the individual investors as shown above, the economic benefits and the attached financial attractions are the characteristic outcomes of a healthy industrialised economy; and it is what Nigeria should pursue going forward.
Foods and other agro-allied industries should put in more effort and vigour in their areas of production, especially now that the global food supply chain is under the threat of the ongoing Ukrainian-Russian war, which has destabilised global food supply chain; and has led to fear of food insecurity (especially in grains supply) globally. This offers an ambitious opportunity for upcoming global players in the food supply chain to take advantage of the present situation (as a low hanging fruit) and launch into the global food market with innovative agro-based, processed foods for the international market. African countries presently lag far behind, with a paltry cumulative figure (as low as three percent) in terms of industrialisation, and in the finished products or manufactured goods supplied to the global market.
Nigeria needs to leverage the current global food supply chain opportunity by improving to fight food insecurity, globally. From the abundant richly endowed agricultural produce of all sorts and arable lands, with its conducive weather conditions, which can support improved agribusiness of the 21st century for energy transition, a lot could be actualized by industrialising African economies.
This is feasible and bankable through aggressive industrial investments in all the agric value chains, from farming to processed foods, which the global market earnestly craves presently to maintain sustainable food security. This requires key actors to conveniently shift committed and dedicated efforts in developing the agric sector of the economies on their respective cash crops with comparative advantages they exclusively enjoy; and thereafter, supply their added value finished goods to the international food markets and thereby contributing to global food security and sustainability.
Sunny Nwachukwu (Loyal Sigmite), PhD, a pure and applied chemist with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce. He can be reached on +234 803 318 2105 (text only) or schubltd@yahoo.com
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