Franklin Alli reports that commitment, synergies and political will among the three tiers of governments and the Organised Private Sector will be key to making ‘Clusters Concept’ the country’s new industrial development strategy (2007-2011) work
Ugwu
Prof. Paul Collier of Oxford University, UK, believes if Nigeria must attain considerable height in its drive for industrialization, then it must embrace the current global practice of industrial clusters.
Collier who spoke at a day’s conference on International Manufacturing jointly organised by the Lagos Business School Pan African University and Manufacturers Association of Nigeria, MAN, believes Nigeria has abundant investment potentials to become a super industrial giant and a competitive economy on the continent and globally.
An industrial cluster is a geographical concentration of firms belonging to the same or complimentary businesses, which offer opportunities for SMEs to emerge and grow by facilitating specialisation and collective efficiency.
Collier, who spoke on the theme: China’s Manufacturing Ascendancy: Lessons for Nigeria, said China is moving upward in manufacturing activities because, as he puts it, “There are huge clustering of manufacturing industries. In fact, two-third of manufacturers in China operates in clusters. Manufacturers in China, Malaysia and Indonesia are making head way because they operate in clusters.
“Trading and manufacturing in clusters has been the new direction globally in the past 25 years. That is the future of global manufacturing,” he further said.
This must a familiar terrain for the Minister of Commerce and Industry, Chief Charles Ugwuh. He is so passionate about the clusters concept that he sold the idea first to the organized private sector, OPS, stakeholders from where he was appointed minister, and later to the federal government who recently approved it as the country’s new industrial development strategy (2007-2011).
A participant however noted at the occasion that industrial clusters can only make sense if there are identifiable industries across the country. “Of what use are clusters with no industries? Secondly, why are we inventing a new way when you already have one?
The old industrial estates are dying and are being replaced by churches and warehouse for generators. What I’m saying is that don’t talk of clusters when we have not revive the industrial estates, across the country – Bompai and Sharada Industrial Estates in Kano, Kakuri in Kaduna, Trans Amadi Industrial Estate in Port Harcourt, Ikeja, Ikorodu, Isolo, Ilupeju, Amuwo Odofin industrial Estates all in Lagos, etc. When we have revived them, we can then cluster them,” he said.
Nevertheless, the Minister of Commerce and Industry, noted that the thrust of the new industrial development blue print is to have an industrial parks established in each of the six geo political zones of the country.
Industrial Parks
According to Ugwuh, industrial parks are mega parks covering areas of more than 30 to 50 square kilometers for large manufacturing companies with high value addition in the production of finished products or raw materials. They could be set up by two or more states in collaboration.
Activities in these parks will focus on the resources in which the geo-political zone has both comparative and competitive advantages.He recommended that industrial parks should concentrate in the following areas of business activities:
· North East: Agriculture and Solid Minerals like gypsum, biomass, ethanol, bio diesel and tropical fruits, etc. · North West: Gum Arabic, livestock, meat processing, tanneries, biofuel, etc.
· North Central: Fruit processing, cotton, quarries, furniture and minerals
· South East: Palm oil refining and palm tree processing into biomass, particle boards. Also manufacturing of over-the-counter (OTC) drugs, plastic processing, leather goods, garments, etc.
· South West: Manufacturing, garments, methanol, distributive trade, general goods, plastic, etc.
· South - South: Petrochemicals, manufacturing, plastic, fertilisers, fabricators, oil services, and distributive trade (TINAPA).
Each industrial park, it is expected, will have the following amenities: independent power plant unit of up to 50/100 MW, training support, internal road network and major roads links to highways, railway where possible, water supply, airport within 100km radius new town development including tertiary institutions within 200km radius. The Minister estimated that N60 billion to N150 billion will be required to set up an industrial parks.
Industrial Clusters
Industrial clusters are usually small in scope than industrial parks. Industrial cluster are located on an area of between 100 and 1,000 hectares of land. These clusters can be established with the participation and assistance of states and local governments. In addition to be enclave of manufacturing they could also be used for breaking bulk. The financial requirement, he disclosed, will be between N10 billion and N50 billion.
He pointed out that some level of cluster development already exists in the country though in small forms. For instance, in Aba, Abia State, clusters have evolved around leather related industries. Also in Rivers State, some level of clustering has emerged in the region where we presently have the Eleme Petrochemical industry.
Enterprise Zones
These are platforms of 5 to 30 hectares targeted at artisans and vocational workers such as mechanics, block makers, small scale furniture makers, timber merchants, welder, metal fabricator, garment makers who constitute over 70 per cent of Nigeria’s private sector. Enterprise zones are to be located in both state capitals and in every local government areas. Funds required to set up an enterprise zone is between N2 billion and N5 billion depending on the size.
Challenges
As good as the clusters concept may seem, participants at the forum, noted that infrastructure that will make it work is not on the ground.
In his paper National Competitiveness: The Role of Manufacturing, Mr. Jude Uzonwanne, Director, Risk Management Economics, New York, noted that there is need to solve the problem of electricity generation and distribution to industries.
According to him, for manufacturers in the country to be at par with their counterparts in South Africa, Malaysia, and for government to achieve vision 2020 aspirations, 100,000 megawatt of electricity supply will be needed, stressing that the North alone requires 10,000 MW.
He noted that over the last nine years, from former president Olusegun Obasanjo’s administrations until now, the power supply situation has not been solved.
“We still haven’t solved the power problem. Fundamentally, we need to bring in more private investors, and also the unbundling of PHCN that the Federal Government started under Obasanjo’s administration, we need to intensely look into an independent agency for private investments in Independent Power Project.
He urged government to stop giving Nigerians the impression that 10,000 MW would solve the problem of electricity generation and distribution to industries and households. “For the country to achieve vision 2020 aspirations, 100,000 megawatt of electricity supply will be needed, and 10,000 MW,” he stated.
The 774 local governments in the country, he further said, also have roles to play in reviving manufacturing in Nigeria. He stated that instead of preying on manufacturing firms in their domain by slamming various kinds of levies, it is high time the local government officials learn how to make economic analysis, and how to think like an investors and come out with incentives that will attract investment into their councils. “At federal, states, and local levels, we want government officials to develop the skills and think like investors,” he said.
Consequently, Ugwuh said, it has become imperative for government to take the lead by kick starting the process. Once some models have been set up, he stated, they could be replicated by third party investors including foreign investors.
But Prof. Collier is of the view that Nigerian government could start the process now by deploying some part of its oil money for infrastructure development and invests in the clusters project.
The governments of China, Malaysia, Indonesia, United Arab Emirates, Collier noted, used their oil money to launch themselves into global manufacturing through massive investment in infrastructure and key sectors in the last 30 years.
For the clusters concept to succeed it was also recommended that the Bank of Industry should be recapitalise and place in a position to provide long term loans for business development. Major turnkey developers, it was suggested, can also be encouraged and attracted to establish clusters in different parts of the country.
In fact, the overall success of the clusters concept is hinged on a workable private public partnership agreement.
Some of the benefits to be reaped from the clusters concept if well implemented is to grow the manufacturing sector and make it contributes meaningfully to the national GDP, employment, fast track foreign direct investment and make Nigeria to rank among the top 20 economies in eleven year’s time.
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