The daunting challenges hampering investment in the industrial sector have over the years led to the shutting down of many manufacturing firms. Low capacity utilization occasioned by the epileptic power supply, foreign exchange restrictions, and huge importation of raw materials, among others, have remained a recurring decimal. Goods that could be produced locally are imported from abroad, thereby strengthening the industrial base of the exporting countries while killing ours.
The unconducive business environment has forced many hitherto first line manufacturing concerns to relocate to the neighboring countries. Michelin and Dunlop tire manufacturing firms are in this category. Ghana, especially, has benefitted from Nigeria’s loss. The issue of decrepit roads across the country is an intractable challenge of which solution doesn’t seem to be in sight.
It is against this background that concerns have been raised that a whopping 200 billion investment in industrial manufacturing in the Ogun-Lagos industrial corridor could be in jeopardy because of bad roads in the areas. Lack of access roads to the industrial estates is a major hindrance that the investors have been worried about.
From difficulty in accessing raw materials owing to bad roads, to vehicles that break down and have to be repaired routinely, it is becoming increasingly difficult to plan production. This situation does not augur well for the manufacturing concerns within the industrial estates.
Lean manufacturing cannot be practiced in such a situation as capacity utilization remains low because it has become difficult to get products to the factories. The cost of production in the areas is very high, in addition to the wear and tear of vehicles.
We recall that at the height of manufacturing challenges a couple of years ago, Lagos lost the position of being Nigeria’s industrial hub to its neighbor, Ogun State as the operating environment became unconducive. Many industrial estates in Lagos were converted to religious and event centers as well as residential areas.
Consequently, Ogun State overtook Lagos as Nigeria’s leading industrial hub, with virtually all the large enterprises in Lagos having a factory in the state. Ogun zone has maintained the profile as an investment destination hub of Nigeria.
In 2019 alone, investment between the two states hovered around N200 billion, with Ogun taking a fair share in the first half of 2019 and Lagos, overtaking in the second half of the same year. The estimated cumulative manufacturing investment from 2013 to the second half of 2019 was N5.05 trillion based on data generated from surveys conducted by MAN over the period.
In the second half of 2019, manufacturing investment stood at N257.66 billion, representing N10.58 billion (4.3 percent) and N19.21 billion (8.1 percent) increase over N247.08 billion and N238.45 billion recorded in the corresponding half of 2018 and the preceding half respectively.
Specifically, Ogun ranked higher in the first half of 2019 with an investment of N74.56 billion, though lower than N95.31 billion recorded in the first half of 2018 but higher than N26.16 billion recorded in the second half. But of recent, Ogun State has been hard hit by insecurity, poor infrastructure, and revenue-driven regulatory agencies hampering investments, according to investigations.
With decaying road infrastructure and the imposition of multiple levies on industrial firms in Ogun and other neighboring states, Lagos has begun to witness a change in fortune as latest data from the Manufacturers Association of Nigeria (MAN) show that capacity utilization has grown in factories in Lagos, even as the state attracted the highest level of manufacturing investment in 2019, ahead of Ogun State.
Lagos has reportedly witnessed growth in gas pipeline networks to industrial estates, thus increasing electricity supply to some areas and an easily accessible market for consumer goods devoid of inter-state logistics challenges.
With decaying road infrastructure and the imposition of multiple levies on industrial firms in Ogun and other neighboring states, Lagos has begun to witness a change in fortune as latest data from the MAN show that capacity utilization has grown in factories in Lagos, even as the state attracted the highest level of manufacturing investment in 2019, ahead of Ogun State. The declining fortune in Ogun is attributed to the parlous state of infrastructure. The Lagos-Badagry Expressway where Agbara Industrial Estate in Ogun is located is failing thus increasing travel time and cost, with many resorting to living with friends and families during the week and coming home at weekends.
With the torrential rains in Lagos and neighboring states at present, a journey to the industrial estate takes an average commuter, via public transport about five hours, as commuters maneuver through the huge gullies caused by erosion. The perennial road construction on the Badagry Expressway appears to have grounded to a halt. Valuable man-hours are lost in traffic.
The MAN has called for improved infrastructure. The Acting Director-General of MAN, Ambrose Oruche, said members have always called for improved infrastructure over the years. According to him, the roads in the estate are terrible and deter investment, adding that when access roads to factories are limited and in a bad state, the challenges are overwhelming and increase the cost of production. He bemoaned the inability of the government to address the challenges.
It is known that the government does not have what it takes to address the situation now. It should embrace public-private partnerships in addressing infrastructure deficit. Tax rebates can be given to ensure that the infrastructure is put in place. It is a win-win situation for everyone rather than going for cheap loans. This is what manufacturers are saying.
Similarly, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf said it was regrettable that while the government talks a lot about supporting the manufacturing and promoting industrialization, the reality tells a different story.
Rather than fixing the roads, there has been blame game on whose responsibility it is to reconstruct the roads. The Agbara Road, for instance, is a federal road that should receive the attention of the Federal Government. Leadership failure is the reason why many things have gone wrong. There is no vision to transform the country industrially. Such a vision could have inspired innovative ideas that would lay a solid foundation for industrial development. There is a need for a paradigm shift, especially, in our thought process, for that would be the engine that would power industrialization in the country. It is shameful in the extreme that our political leaders have failed to invest robustly in technical education and science, technology, engineering, and mathematics (STEM) subjects in our schools. That clearly is the foundation of industrialization. But then it should not be too cumbersome to build access roads for the people and manufacturers.