Industrial revolution: Making BRICS to BRINCS achievable

BRINCSLAST year, the Lagos State government in an effort to drive development agenda in the country organised the Ehingbeti economic summit in order to focus on how Lagos, can become a first-choice destination for foreign investors given its viable potential, going by the affirmation that Nigeria can be among the top economies in the world if the proper infrastructures are put in place.

To drive the development agenda, the BRINCS acronym was created to capture Nigeria’s aspirational move to emerge the next member of the BRICS group. The lumping together of Brazil, Russia, India, China and latterly South Africa (BRICS) into some sort of G8-lite was first coined in debates over a decade ago, and then in 2009, the group actually became operational in practice if its yearly summits can be used as a marker.

While the original construction of the group is well documented and explained, not least so the inclusion of South Africa raises questions about the size and direction of the BRICS. With Nigeria’s aspirations to join the group, there are lingering questions if there is room for another African member, namely Nigeria that would result in BRINCS instead of BRICS? If desirable, how ready is Nigeria, given its slow-paced economic and industrial growth?

With regards to the size and directions of the group, it remains a fairly exclusive little club. Though, the BRICS might not yet be one of the globe’s most influential groups of countries, but it is certainly the international bloc many developed economies are beginning to use as measures of development for developing economies. The group has tried to grease the wheels of opportunity between members, and probably add weight to its occasional collective wishes in other international forums.

The original concept of the group was a (diverse) grouping of (large) developing countries, whose economies and socio-political footprint were growing at a discernible momentum in the early 2000s that would project them to be among the most influential nations on earth by 2050 in terms of global economic share and pure weight of their populations.

Some industry watchers believe that Nigeria has the size, and the economic weight, and it might very well overtake South Africa as Africa’s largest economy within ten years.

However, despite the heavy economic activity to its credit, many believe that the nation still lacks stability, especially in terms of policy generation and implementation.

For instance, during the Ehingbeti summit, it was affirmed that Lagos is home to about 2,000 industrial complexes, 10,000 commercial ventures and 22 industrial estates, contributes 30 per cent to the nation’s GDP (2006 statistics) and is the leading contributor to the non-oil sector GDP (2011 statistics).

Furthermore, the state accounts for over 60 per cent of Nigeria’s industrial and commercial activities, 70 per cent of national maritime cargo freight, over 80 per cent of international aviation traffic and over 50 per cent of Nigeria’s energy consumption.

For instance, the Central Bank of Nigeria (CBN), in its recent report on the state of the nation’s economy, expressed concern over the sustained trend of low domestic production and investment in critical infrastructure, saying the nation would continue to rely on production for other nations through import, if the trend is not controlled.

According to the apex bank, in 2012, Nigeria’s infrastructure challenges were brought to bear at several fora and reports centred their poor rating of the country and costs of doing business analyses on it. These included irregular supply of electricity, shortage of water, fuel scarcity, unreliable health care services, unstable educational institutions, bad roads, malfunctioning ports and poor telecommunications services.

“The slow global recovery continues to dampen world demand for commodities and possibly, lower prices could cause adverse trade shocks. Government, therefore, should address gaps in domestic production and investment in critical infrastructure in an effort to curtail the nation’s heavy dependence on import,” the report said.

Also, Cocoa Processors Association of Nigeria (COPAN), the umbrella body of all cocoa processing companies in the country have called on the Federal Government to urgently come to their rescue and protect the nascent sector from dying.

COPAN accused the European Union of trying to stifle the cocoa processing industry in Nigeria by imposing an additional six per cent tariff on processed cocoa products exported from Nigeria to Europe and America.

Specifically, the operators, under the aegis of Cocoa Processors Association of Nigeria (COPAN), decried the unbriddled exportation of raw cocoa beans, an action, which the body described as killing the sector, while rewarding sole exporters of the product, who have no investment in the country.

The Chairman of the association, Dimeji Owofemi noted that value addition to raw cocoa is decreasing as it is being poorly rewarded and unprotected against the massive export of raw cocoa beans materials, while the processed products are also heavily taxed by the same European countries that are charging no tax on raw cocoa beans in an effort to discourage value addition in Nigeria, as the country is said not to be a member of the Economic Partnership Agreement (EPA) group.

The EPA is a scheme to create a free trade area (FTA) between the European Union and the African, Caribbean and Pacific Group of States (ACP) as a response to continuing criticism that the non-reciprocal and discriminating preferential trade agreements offered by the EU are incompatible with WTO rules.

“The Federal Government needs to discourage the export of raw cocoa beans to protect Nigerian value addition and job creation instead of enhancing the industrialisation of Europe, who are again imposing tax of up to six per cent on our value added products and zero duty on our raw cocoa, therefore, helping them to keep their own citizen in gainful and sustainable industrial employment.

“To save our factories, we seek government’s intervention through an imposition of a heavy tax on export of all raw commodities export,” he added.

For the cement sector, the President of Cement Manufacturers Association of Nigeria and Special Adviser to the President of Dangote Group, Joseph Makoju, also called on the government to review its protectionist policy in order to save local industries.

He said, ”we are very concerned about of our investments in Nigerian’s cement industry since government has not shown enough commitment to protect our investments in the cement industry.

“Besides, we are still at an infant stage of the business because we have not started to make profit rather we are investing a lot to expand because we believe in the Federal Government’s blue print for the country’s cement industry. We are looking at the long-term business. I must tell you, we have not recoup our initial investment since we started this cement business and it’s bad these things are happening to us now. I must say here that investors are worry about their investments in this industry.

Also, Prof. Sheriffdeen Tella of the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria needs to start developing its industries and diversify its economy.

He said, “the President of the International Monetary Fund, Christine Laggard, advised in 2011 that primary product exporting countries, particularly oil exporting countries like Nigeria, should take advantage of high and stable prices of their products to diversify their economy. This is with a view to promoting employment and stabilising future incomes.

“Apart from diversifying into agriculture and small and medium scale industrial production, we can diversity horizontally by refining our crude oil locally and thereby obtaining at least seven other bye-products, including bitumen which we spend huge sums of money importing from other countries. Nigeria is the largest user of rechargeable lamps, touch, double SIM phones and other household items. How much of these are assembled locally and what date have we set for the manufacturers to produce the items locally or face total ban? There is no indication that this country is eager to transform into an industrial state very soon, even after Year 2020.”

He noted further saying, “many countries are known to progress economically and scientifically when some threats are becoming visible. For example, Japan, with no important natural resources, developed out of the fear by the leaders that their citizens must get out of the trauma of the Second World War while the neighbouring countries of South Korea, Malaysia, Singapore and Hong Kong needed to develop because they were afraid of dominance by Japan and the threat from North Korea. Rwanda is currently moving up economically because of the need to overcome the precarious effects of the recent war.

“Every now and then, we get information that our neighbouring countries are becoming oil producing and our major oil customers like the United States are not only developing alternative sources of energy but becoming oil exporting countries before the end of this decade. By the end of this year, manufacturing firms in the United State that failed to achieve the prescribed level of wind-powered engines will be heavily penalised.

“This implies reduction in demand for our oil. These are enough threats that should send us to the drawing board and see how the Vision 2020, a good document, can be executed to jump-start the economy for eventual industrial and technological take-off.