More than 70 million people in Nigeria live in extreme poverty, according to The World Poverty Clock. But with the country’s GDP growth lagging behind its population growth at 0.5% to 2.6% respectively in 2017, the country will find it difficult to lift people out of poverty at a desired pace. To achieve the kind of growth Nigeria needs, its manufacturing sector has a key role to play. However, the sector contributes less than 10 percent to Nigeria’s GDP.
Manufacturing creates more jobs than any other sector, creating value and fostering innovation, leading to sustainable economic growth. Eczellon Capital, an Africa-focused investment bank, recognizes this and is keen to support the manufacturing sector in Nigeria as it works hard to help the economy grow. This is why the CEO of Eczellon Capital Diekola Onaolapo embarked on a courtesy visit to the Director General of the Manufacturers Association of Nigeria (MAN) Segun Ajayi-Kadir at the MAN House in Lagos on Friday.
“Manufacturing is at the core of what we need to get right as a continent,” Diekola Onaolapo said, adding that capital is one of the major pillars that will help Africa and indeed Nigeria, grow its manufacturing sector.
“We are in the business of creating and allocation of capital; one of the most important tools for any economic activity and even economic development,” he added.
“One of the issues we found there is for companies in Nigeria and Africa has been the inadequacy of capital, whether it is in a wrong mix or , lack of access to it in its efficient form; in a way that it can facilitate economic activities. That is the problem we have dedicated ourselves to solving for governments and private sector corporates in the last 8 years and we have been able to achieve some remarkable feat for both the public and private sector,” the Eczellon Capital boss said.
He stressed the need for Eczellon Capital and MAN to collaborate to further grow the manufacturing sector and exploit the opportunities offered by the huge consumer market that Africa is. Hence, the company, which has been involved in some of the largest financing deals in Nigeria in recent years, is seeking areas through which it can provide value to members of MAN and even to the association as a whole, including areas such as advocacy, all to ensure the industrialization dreams of Nigeria becomes reality.
The Director General of MAN Segun Ajayi-Kadir expressed delight at Eczellon Capital’s visit. He also said he was impressed that the CEO of Eczellon Capital understands the manufacturing sector and the issues it faces in Nigeria.
“There is no nation on earth that can be wealthy if they are not industrialized,” he said.
“The foray into technology and the advancement that has been made are all geared towards delivering one form of service or the other, and every physical aspect of it has to do with items that are produced.
“In Nigeria where we have a population of 180 – 200 million, you cannot have people fully engaged by the government. The surest way for you to ensure that people are employed is through manufacturing,” the MAN DG stated.
He wondered why the manufacturing sector has not been given the attention it requires by successive governments in the country.
“Manufacturing is not a vocation; it’s a decision you have to make. Government has to say I want my country to be industrialized and then you do certain things,” he said, explaining that there are some deliberate steps the government has to take if it truly wants to encourage manufacturing in Nigeria, one such is financing.
He cited interest rate, which is currently above the inflation rate, as one of the challenges manufacturers face in Nigeria.
“We compete with markets where interest rate is sometimes below 1%,” he stressed.
“For instance, Nigeria sells power to Ghana at N26 per kilowatt-hour, but they sell to manufacturers in Nigeria at N42-N44 per kwh. Ghana is just 45 minutes away and you operate a Trade Liberalisation Scheme that means they can import to Nigeria free of duty. Only a stupid man will set up here.”
With the current state of things in Nigeria, especially in terms of financing, Ajayi-Kadir said Eczellon Capital had brought to MAN a refreshing idea about how to add value in terms of access to finance.
Eczellon capital has helped organizations, both in the public and private sector, as well as governments in Nigeria and several countries in Africa to explore alternative financing options for critical projects that are crucial to the growth of the economy. The company has successfully done this over the last eight years, and is constantly looking for more opportunities to make impact by providing access to capital.
Also published on Medium.