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CEO Interview

‘Structured PPP Would Create Enabling Environment For Manufacturers’

Posted: Mar 25, 2016 at 3:00 am   /   by   /   comments (0)

Multiple Taxation Disincentive To Investment In Nigeria


The Managing Director of International Paint For West Africa (IPWA), Sulaiman Tella, in this interview with Sylvester Enoghase, is optimistic that given the high population advantage, an array of intellectual assets, as well as Government support to resuscitate industries, manufacturing in Nigeria will blossom to serve local needs and regional African markets.




How excited are you about Nigeria as a future manufacturing hub?

Manufacturing in Nigeria has been neglected for too long due to the infrastructural gap and reliance on imported products.

The recent downturn in the global oil market with the resultant impact on the foreign exchange earning capacity of the country has provoked a look inwards towards enhancing local manufacturing.

To this end, we are optimistic that given our population advantage, an array of intellectual assets, as well as Government support to resuscitate the industry, manufacturing in Nigeria will blossom to serve local needs and regional African markets.

What in your view are the challenges to develop Nigeria as a manufacturing centre of excellence?


Manufacturing is largely driven by infrastructure and this is the major challenge facing the industry in Nigeria. Infrastructure cuts across power, road network and machinery.

The fundamental challenges of power supply, in particular, pose a significant threat to developing the industry. Appetite for foreign goods, poor regulations, unavailability of raw materials, an imperfect legal system, lack of skilled manpower and unavailability of sufficient funding are also challenges militating against the industry.

What is your vision for this industry?

Growth and expansion of our business, partnerships in the industry, enabling manufacturing to contribute significantly to the nation’s revenue base and GDP at large. Nigeria should be the manufacturing hub for sub-Saharan Africa driven by scale.

What is your message to other manufacturers and Nigerians?

It is pertinent to emphasise the need for patronage of the local manufacturing industry as this is vital to the sustainable growth of the local economy. It is time for both the private and public sector to take responsibility for the growth of the manufacturing sector and actively play their part. The diversification of the Nigerian economy is not negotiable – the development of the real sector including agriculture value chain, manufacturing, etc. is the vehicle to achieve this.

It is also important to address the fundamental issues facing the manufacturing industry through structured public private partnerships in order to create an enabling environment for businesses to thrive. It is time to act and develop sustainable businesses that can drive the growth of the nation.  At IPWA, we are strongly committed to contributing our quota to building a sound manufacturing base in the country.


As a manufacturer, what are those policies you need to heave a sigh of relief?


We have always talked about poor operating environment. In the areas of infrastructure, a lot need to be done. The power sector is not yet at the level where it should be, it can be better. Our roads need to be rehabilitated. The railways should be upgraded. Take for instance, the Peugeot Automobile of Nigeria (PAN), in Kaduna, used to have railroad from Lagos to their factory. That made it easier for them to evacuate their raw materials from the ports to Kaduna, the same way they shipped the finished products down south. Now that rail line is not functioning, government should rehabilitate the rail lines.

Multiple taxations is disincentive to investment in this country, both for local and foreign investors. Lack of funds at an appropriate interest rate is a major challenge. From time to time, CBN comes up with intervention fund that is not the solution. There should be a policy by CBN to make it possible for the commercial banks to give out loans and facilities to manufacturers at a relatively low rate, as it is obtainable in other parts of the world.

There is no place in this world where manufacturers source loan at 28 per cent. There is no way you can borrow money at 23 per cent and expect to make enough profit to pay the interest on that loan and keep some for yourself and shareholders. So there is the need to strengthen Bank of Industry (BOI), empower them financially to be able to cater for the financial needs of the manufacturing sector.

BOI should also be made to lower their interest rates. Towards the end of the last administration, they launched the Nigeria Development Bank; we are urging the present government to implement it as soon as possible. We need that development bank to be able to give out loans at 10 percent interest rate, because that is the only way we can get both local and foreign investors into the country.


What in your view are the challenges to develop Nigeria as a manufacturing centre of excellence?


In recent time, especially with dwindling oil revenue, depleting foreign reserves has led to foreign exchange volatility which is impacting local manufacturers negatively making it nearly impossible to source raw materials and machinery.

More importantly, adequate infrastructure has been one of Nigeria’s greatest development challenge. We are however assured by the efforts of past and present government to address the infrastructure challenge. If the infrastructure challenge is resolved, Nigeria’s manufacturing sector will experience rapid growth, possibly surpassing the overall growth forecast for the economy because of its enormous and untapped potential.