By Udeme Clement

As the reform in the banking sector moves from new monetary policies formulation to recapitalisation of financial institutions, there are strong indications that the manufacturing sector of Nigeria ‘s economy is rapidly going under.

Mallam Lamido Sanusi

Statistics obtained from a survey carried out as part of its membership operational audit in January 2010 by Manufacturers Association of Nigeria (MAN) revealed about 834 manufacturing firms across the country closed shop in 2009 due to harsh economic environment, even as half of the remaining operating firms had been classified as ailing, which poses a great threat to the survival of manufacturing in Nigeria in the next few years.

Accordingly, the 834 figure represents the cumulative aggregate of firms that shut down their operations in 2009. MAN shows that in 2009, a total of 176 firms collapsed in the Northern area, comprising the Kano and Kaduna states manufacturing axis.

In the South-East area, which comprises Anambra, Enugu, Imo and Abia states, a total of 178 companies closed shop during the period, while in the South-South area, which consists of Rivers, Cross River and Akwa Ibom states, 46 companies shut down operations before December 2009.

The South-West area, which comprises Oyo, Ogun, Osun, Ondo, Ekiti, Kogi and Kwara states, lost 225 member companies during the year. In Lagos State covering Ikeja, Apapa, Ikorodu and other industrial divisions in the state, followed closely with 214 manufacturing firms closing shop before the end of 2009.

In an interview, the executive secretary, Manufacturers Association of Nigeria (MAN), Ikeja branch, Mr. Segun Ajayi- Kadir, told said that a greater number of MAN’s members currently out of business are mostly textile manufacturers.  “Influx of foreign textile materials into Nigerian market and lack of infrastructure for efficient production as serious economic woes facing the industry”, he stressed.

Ade Martins Odigie

Also, the National President, National Union of Banks, Insurance and other Financial Institutions Employees (NUBIFIE), Ade Martins Odigie, in a chat with Sunday Business, explained that the on-going reform in the banking industry is boosting industrial growth in order to create jobs for the citizens.

He called on the CBN as the monetary authority to formulate polices that would enhance industrial development now and in the long-run. He added, “In reviewing the recent banking reforms, in particular the audit, which led to the dissolution of previous managements and boards and subsequent appointment of interim managements, injection of life line funds, setting up of Asset Management Company of Nigeria (AMCON), proposed sale and recapitalisation among other measures had fallen short of the general expectations.

What Nigeria needs is monetary policy that would revamp the real sector of the economy to enhance relative full employment in the country”.

He pointed out, “What government should do is to recapitalise the bank of agriculture to enable it operate effectively with a wide network and the capacity to reach every part of the country. Once this is done, it means about 60 per cent of the problems associated with poverty in the country would be solved.

Recapitalisation of this bank would allow farmers easy access to credit facilities to operate on larger scales than what they are doing at present. As such, they would expand their capacity to create more jobs to solve the problem of unemployment in the economy.

His words: “When authorities had failed to effectively supervise the existing conventional banks and deal with their numerous challenges, it becomes likely that the proposed Islamic banking model may follow the same path, especially given its limited scope for earnings in terms of profits.

The existing banks should be encouraged to introduce services to meet the special needs of their diverse customers. Also, while we acknowledge the cost-implication of cash based transactions, we are equally mindful of the literacy level of the vulnerable segment of the depositors, which largely constitute the informal sector operators such as market women, artisans, rural peasants and traders.”