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Exclusive interview with Minister of Commerce and Industry
Mon, 14 Jan 2008 14:57
Caterina Bortolussi

Federal Minister of Commerce and Industry, Engr. Charles C. Ugwuh, at his office in Abuja.

The growth of Nigeria's manufacturing sector is vital for the country to realise its dream of becoming one of the world's twenty largest economies by the year 2020. Caterina Bortolussi spoke to Minister of Commerce and Industry, Engr. Charles C. Ugwuh, on how his ministry plans to grow the economy and about investment opportunities currently available in Nigeria.

Could you please give an introduction of your ministry, its mandate and strategy in the non-oil sector?

The ministry has the mandate to grow the economy which consists of two components, namely trade and industry (manufacturing).

In the area of manufacturing, we are looking at a new strategy based on the concept of clustering - developing what we call industrial parks, industrial clusters, enterprise zones, incubators and then free trade zones. This came from the realisation that because of Nigeria's size and a lack of resources, it will be very difficult to provide adequate infrastructure across the whole country in the near future. Therefore, in order to grow the economy, our strategy is to limit our activities to specific points which can form the basis for growth.

The first platform is to establish at least one industrial park in every geo-political zone. I am talking about areas of between 30 and 50 square kilometers which will link three or four states together with regard to industry.

The second platform is the development of industrial clusters which is located in each state. A state may have an advantage in livestock and concentrate on that. Another state will want to direct their attention on minerals and quarrying. Other states, such as those in the south-east, may want to focus on the production of oil palm.

The third platform is to create enterprise zones which operate in local government areas. The idea behind the enterprise zones is to group those involved in smaller, informal activities together. This will include furniture makers, welders, block makers, all those you see clogging the streets. We plan on taking them out of the streets and establish them on a piece of land - anything between 30 and 200 hectares - with water, electricity, security, fencing, police and other services. These enterprise zones will therefore scale up the informal sector to increase competitiveness.

Incubators, the fourth platform, are for start up businesses, for people who have just graduated from university and have ideas they want to develop. These incubators will be in local government areas and will provide new businesses with the facilities to serve as a launch pad. By working closely with the private sector we will aim to nurture and grow good ideas into successful businesses.

The final platform is the one we call free trade zones. Free trade zones are located on our coastline or near areas with an international airport. The idea is to enable a company to bring in materials and to do business in Nigeria as if you were in a foreign territory - free from duties, taxes and frustrations that can hamper the growth of your company. For example, the free trade zone in Onne targets the oil industry and has grown rapidly. There are currently a cluster of petrochemicals developing around Onne. These include the Fertilizer Company, Eleme Perochemical, which was taken over by Indorama, and Port Harcourt refinery. The area will eventually become a hub for petrochemical companies.

What about security matters?

We are going to throw a security ring around the zone and the area. The federal government is doing a lot to improve security.

What are the main specific investment opportunities currently available in Nigeria?

There are plenty of opportunities such as in the production of methanol, ethylene, polyethylene and various other solvents. A methanol plant is currently in the pipeline at Lekki, so the petrochemical sector offers a lot of scope for investment, both in commodities and fine chemicals which can be utilised for the production of other products.

A major benefit of polyethylene is that it can be processed at small and medium enterprise (SME) clusters into any amount of plastics, containers, bottles and so on. There are so many things you can process and this is a new beehive, able to feed from the raw materials that come from the petrochemical sector. Another area we looking at is the production of ethanol which is based on sugar cane.

One major area where we are trying to attract investment is in the conversion of oil palm trees into bio-mass and particle boards. In the East and South East there are vast amounts of overgrown palm trees which can be harvested and produced into these products. Particle boards are used for furniture, ceiling materials, panels and so on. We are looking for investors and are currently talking with some from China and Malaysia. The stock of old palms available will last over fifty years and they can keep three of four big factories running for close to fifty years. When these trees are harvested, we can start replanting to create new opportunities in the oil palm industry. This will ensure that we remain competitive in the growing the oil palm, not only for consumption but also for bio-diesel.

Cassava is another opportunity for us because there is a worldwide demand for cassava flour, cassava chips, starch, etc. At the moment most of the activities relating to cassava are being done on a very small scale. We are looking at establishing big plants that will enable us to deal with several hundred tonnes in a day.

I would also like to point out that Nigeria currently consumes huge quantities of cement, therefore if you want to build a cement factory, this is the place to come to. The local capacity here is very small, about 6-million tonnes while total demand is around 17-million tonnes, so there is a gap which needs to be filled.

The federal government is also looking at different policies on energy which will stimulate the concept of clustering. We are talking about providing gas turbine plants, especially in the southern areas, which will generate between 50 to 100 megawatts very quickly in order to attract industries to the cluster. This is a much better strategy than what we had in the past where people in rural areas had to depend on generators as a power source - Nigeria cannot be competitive with generators.

Vision 2020 can only be actualized through industrial development. We have to produce; we cannot continue to be a consuming nation.

Do you think the power supply issue will be tackled during this administration's tenure?

The problem is already being tackled. There federal executive council has given approval for the refurbishment of transmission lines to improve power supply. The issue of incentives is also currently under major review by a committee under Senator Udo Udoma. They are reviewing the whole thing relating to waivers, incentives and licensing.

What is the role of the Industrial Training Fund (ITF) with regard to manpower development?

Over the years things where not the way they are supposed to be but gradually we are beginning to get it right. The ITF is the key to the success of the parks, clusters, enterprise zones and incubators. The ITF is expected to come up with a genuine module for the private sector regarding the cluster concept. We are also trying to get the ITF involved in the training modules for the human resource development, which is an important aspect of industrial growth.

You are talking about private public partnerships (PPP) to ensure economic growth and to move the country forward. What are the incentives and policies the government has put in place in order to ensure the realisation of PPP and to attract foreign direct investment?

The Nigeria Investment Promotion Commission (NIPC) is incidentally a parastatal under this ministry and it has a booklet of incentives, policies and what have you for foreign investors to come and invest in a conducive and favourable business environment. The ministry itself has gone out to study and look at what other countries have done in this regard. We have gone to countries such as South Africa and China to determine what they are doing, that we are not doing and how we can apply their strategies into our own environment.

Another problem investors may face when they come to Nigeria is the excessive bureaucracy and bottlenecks associated with the way things are done here, so to what extent has the creation of the NIPC by the Corporate Affairs Commission (CAC) helped to tackle this problem?

A whole lot has been happening. If you go to the NIPC, they have what they call an OSIC (One Stop Investment Centre). You can register your business in Nigeria within 24 hours if you have the right papers. But sometimes due to an already formed notion, it appears nothing is happening but I tell you a lot is happening.

Right now efforts are being made to have goods cleared within 24 hours, all agencies are working hard to keep the reforms going but it will take a little time for the results to begin to show.

What do you think is the role of the Bank of Industry in nurturing and supporting Nigeria's indigenous companies?

We are trying to get the government to use the Bank of Industry in achieving this. We believe companies can get long term facilities from the Bank of Industry or from private sector banks to build structures in the cluster. Apart from the Bank of Industry we have small and medium scale development agencies; they are all involved in this process.

Industrialisation plays a pivotal role when it comes to the realisation of President Yar'Adua's seven point agenda and Vision 2020, could you please comment on this?

Industrialisation is the key to wealth creation, poverty alleviation and employment generation, no matter how you look at it. I think it was the President of Malaysia who said that the whole thing happening in the capital market is gambling, you just have to produce. No matter what the situation is, if you are producing you have an advantage. The other day we were told that the Chinese trade surplus for the month of October was over a billion dollars, simply because they are producing. If we begin to produce, Nigeria will be the country to come to.

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