Manufacturers spend about N500 billion yearly for maintaining their power plants, the Chairman, Economic Policy Committee (EPC), Manufacturers Association of Nigeria (MAN), Reginald Ike Odiah, has said.
He lamented that irregular electricity supply was taking a huge toll on manufacturers despite the handover of the 18 successor companies of the defunct Power Holding Company of Nigeria (PHCN) to new core investors under the privatisation about two years ago.
Oduah told The Nation on the sideline of the Annual General Meeting of the MAN, in Ikeja that a situation where manufacturers spend a whopping N500billion yearly for fuelling, running and maintaining their power plants, along with other additional costs of providing infrastructural deficiencies, was not good for business.
Odiah, who is also the Managing Director/CEO, Bennett Industries Limited, said the huge cost of providing alternative electricity is largely responsible for the high production cost for local manufacturing. “Manufacturing cost in Nigeria is twice that of Ghana, four times that of South Africa and Europe, and nine times that of China and Malaysia,” the industrialist said.
The EPC Chairman added that other consequences of high production cost include low Gross Domestic Product (GDP) contribution by the real sector, especially manufacturing to the economy, lack of interest in investing in Nigeria by both local and foreign investors, closure of factories and migration of surviving ones to greener pastures, and others.
Odiah, who spoke on ‘Serious constraints to sustainability of the real sector (from a manufacturer’s perspective)’ said, for instance, Nigeria’s real sector contribution to GDP currently stands at 9.5 per cent, while those of U.S and China stand at 35.6 per cent and 49.5 per cent, respectively.
Continuing, he said Japan, India and Germany boast 38.2 per cent, 38.4 per cent and 35.9 per cent real sector contribution to GDP, respectively. He added that the sector’s low GDP contribution to the local economy caused by lack of basic infrastructure especially electricity is also responsible for the huge losses in tax revenue for the government as well as the high unemployment rate.
He said the nation’s rising unemployment problem was responsible for the prevailing high crime rate and other vices in the country. These issues arise because of “abject neglect, and lack of attention to the development of our basic infrastructure-roads, railways, electricity supply which has resulted in great difficulties in doing business in Nigeria.”