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Manufacturing Key To Economic Growth — Chike Obidigbo

Dr Chike Obidigbo is the Chairman/Chief Executive Officer of Hardis and Dromedas Ltd., a manufacturing company with factories in Anambra, Ebonyi and Enugu states. Hardis manufactures a very wide range of domestic/household products, plastics, cosmetics and health products in addition to waste recycling and research.

In this chat with Financial Vanguard recently, Obidigbo spoke on the economy, relationship between the manufacturing and banking sectors, saying he specifically went into manufacturing to create opportunities for sustainable employment through utilisation of local raw materials. Excerpts:

The real problem in Nigeria’s manufacturing sector:

According to Dr. Obidigbo, manufacturing in Nigeria, especially in the South-East, is a herculean task. “One of the biggest mistakes we are making is that although the Federal Government is desirous of creating employment for the youths, they are not addressing the issue properly because the engine room of manufacturing is power (electricity) and it is the manufacturing sector that will create the needed opportunity for employment.

Manufacturing holds the key all over the world and in Nigeria, we depend so much on imported finished goods, raw materials and capital,” he said.

Explaining how capital is being imported, Obidigbo said: “Because the interest rates abroad are usually very low compared to what we have here, these foreigners produce goods in Nigeria with money borrowed from their home countries. They export the borrowed fund by way of raw materials or finished products into Nigeria, sell them and make mega profits whereas the wholly indigenous industries are finding things very difficult because in the absence of electricity, you are going nowhere.

The fact is that some of these mega industries we use as yard stick to measure economic indices and performance don’t use power from the national grid, they provide their own power and they can afford to do it because their volume of operation is so high that when you distribute the energy cost, it trickles down to kobos; whereas the local manufacturers do not have that capacity to import energy so we depend on either the national grid or diesel generators.”

Power, key to job creation:

He said government should concentrate on providing adequate power, otherwise the Vision 20-20 20 will be a mirage. “Before we built our new factory in Anambra State, we asked PHCN what the power situation was and they told us that before we begin operations, we will be having up to 70 per cent power supply. We were very glad because that meant we would supplement only 30 per cent from the generator.

But since we built that factory till date, I don’t think there was any month we had up to two per cent power supply. So a factory that was to take 460 workers at inception has less than 200 workers because the power is not there, yet, they charge us N107,000 every month as fixed charge for owning a transformer which we bought and installed with our money. PHCN came, inspected and then brought their metre.

So irrespective of what your metre reads, you will still pay the N107,000 fixed charge every month – whether or not you had light for the month! It is very ridiculous and most unfair,” he noted, adding that government should look into it.

He expressed sadness that Nigerian industries are dying “not because we don’t have competent hands, not because we don’t have good manufacturing practice, not because we don’t have the materials to produce and compete, but because the infrastructure is not just there.”

Creating sustainable jobs:

The former lecturer believes that power is the key to the economic development of Nigeria. “I don’t know why the government is being lackadaisical about power supply as that is the key to the economic development of Nigeria. Sustainable jobs should come from definite sources like the manufacturing sector, which is the prime sector of the economy, agriculture, tourism and to some extent, mineral resources.

So if the government really wants to tackle unemployment, they will give 100 per cent attention to power generation and distribution. As an industrialist and former chairman of other manufacturers, I need energy more than anything else. Once we have power, we can double our production capacity and that means doubling the labour force and once we start mopping up the excess labour floating around, we will start reducing crime and more investors will come in because investment is crime-shy.

Wherever there is crime, people are afraid of investing but if we are able to reduce crime by creating jobs, for the people, you will know who is a core criminal and who is a marginal criminal. Those marginal criminals need to be saved. Some of the crises are coming because the low income people are not catered for.

When we talk of job creation, we talk about jobs that are sustainable, where the employee is contributing to the economy not just sitting down and doing nothing and getting paid. I believe that jobs should be created but they should be created meaningfully and in such a way that those that are given the jobs will have satisfaction at the end of the day and would have contributed something to the economy so that when they receive their salary, they know they worked for it and will be happy.

“So the industrial sector holds the key to unemployment and fortunately for us in the South-East, we have so many indigenous manufacturing activities, very creative, capable and competent people who can move our economy forward if only they are given power. If I am in position, I will not relent until we achieve sustainable, quality power that runs for 24/7 so that all the small businesses will grow within a very short period. The best way to reduce crime is to create meaningful, sustainable jobs by providing power.”

Industry/banks relationship:

Obidigbo described President Goodluck Jonathan as a very patient man “because if I were in his position, I would not have allowed Sanusi to stay this long because in spite of everything else, he has performed so poorly in the management of banking relationship with industry. Sanusi evolved so many anti-economic growth policies. His policies depressed our economy so badly that we would not have been where we are today if we had the right policies that guide industrialization.

“Nigeria has one of the highest interest rates in the world. It is unimaginable! Sometimes it could go as high as 35 per cent. That is criminal; no industry can survive on that and without other people’s money (OPM), you cannot industrialise; it is impossible. And you cannot grow an industry on an interest rate of 30 – 35 per cent. Are you a smuggler or into drug business?

No, you are a manufacturer and at the end of the day, you face products that are manufactured under an environment where the infrastructure is functioning, where interest rate is as low as 2.5 – 3 per cent. Sometimes you go to money lenders and they tell you it is 5 per cent per month which is 60 per cent per annum.

“The banks are not even anxious to lend because there are so many restrictions to lending that any bank you approach will tell you they have stopped lending. So I think the president left him alone for too long and it was not good to leave somebody until he has done maximum damage to the economy before action is taken. Sanusi never had the interest of industries at heart and whenever he is making reference to industry, he is making reference to the giant multinationals; they don’t represent industrial activities in Nigeria.

“The real industrialists are the indigenous ones. They are the ones that need help, they are the ones that need money from the banks to grow their businesses; they are the ones that need patronage from government; they need protection from government against the massive smuggling taking place in Nigeria.

When these things are happening, our industries are killed and it does not create any incentive for new people to invest in manufacturing so those of us that are there are just there because we want to help as many as we can and not because of money and you find that so many people that have closed down went into trading and hospitality industry and they made their money.

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