NewsWest AfricaNIGERIA: Wise men in the east

Fri,17Aug2018

Posted on Friday, 09 February 2018 09:58

NIGERIA: Wise men in the east

Enugu’s champions see it competing with Lagos, where AfriOne opened a new factory in April - Credits: George Osodi/Bloomberg via Getty Images
How Nigeria’s new industrial revolutionaries are trying to turn Enugu back into ground zero for a new wave of economic transformation

President Muhammadu Buhari could not have been more explicit. Speaking to the Manufacturers Association of Nigeria during the body’s annual general meeting in Abuja back in September 2016, he said: “This administration is convinced that the key to our quest for economic diversification and therefore survival lies in agriculture and manufacturing.” With falling oil revenue and the desperate need to boost exports to bring in foreign exchange, factory owners dared to believe that their needs were going to be taken seriously.

And why not? Because before oil became king, Nigerian industrial revolutionaries did exactly that. The technocratic government of Michael Okpara, premier of the eastern region between 1959 and 1966, for example, set about making the region a hub of agricultural and industrial revolution.

Nigeria will not simply be able to flick a switch to industrialise. It will need to rediscover the powerful manufacturing bases of its past to muster some of the expertise, and lean on existing infrastructure. There are flickers of this happening in Kaduna State (see page 42). And in the east, there is a formidable hub in the making.

2.4% NIGERIA gdp growth forecast in 2017 - SOURCE: BMI RESEARCH

FISCAL FEDERALISM

Okpara made it a priority to build infrastructure and businesses in each of the nine states in the former eastern region – one of three regions in the newly independent Nigeria. And because each region was in charge of its own spending – known as fiscal federalism – Okpara could use tax from agricultural produce to fund projects. Some of the significant ones include the Trans Amadi Industrial Complex in Port Harcourt, Obudu Cattle Ranch and Resort, and the Eastern Nigeria Development Corporation’s rubber and palm plantations. But Okpara was also one of the founding fathers of the prestigious University of Nigeria and key to the launching of cement factories, breweries and textile mills.

These projects were part of a blueprint conceived by him, alongside Nnamdi Azikiwe, his predecessor, and Mbonu Ojike, the brilliant economist who conceived the 10-year eastern Nigerian economic reconstruction plan (1954-1964). Both men served during Azikiwe’s tenure as premier from 1954 to 1959 in his kitchen cabinet.

Fifty years on, this work forms the bedrock of south-eastern Nigeria’s coping mechanism for the effects of its weak infra­structure and federal neglect after the civil war. At the core of it remains Enugu, the region’s administrative capital and later that of the breakaway state of Biafra.

But long before Okpara, eastern Nigeria was the cradle of coal mining. “Enugu was originally a normal agrarian zone, before coal and then the advent of the miners who organised the government around the mining sector,” explains Sam Nwobodo, Enugu State’s commissioner of commerce and industry. “This brought further development. And then it was the headquarters of the old eastern region all the way to Port Harcourt, Calabar […]. As such, a lot of this old infrastructure was derived from Enugu.”

The government that Nwobodo serves wants to resuscitate Okpara’s legacy. Last December saw the groundbreaking ceremony for a free-trade zone. A Chinese firm also plans to build an industrial park in Emene, an industrial cluster within the city. Emene already houses the Akanu Ibiam Airport, which accounts for a large percentage of goods airfreighted into Onitsha, a city on the banks of the River Niger and home to the largest outdoor market in West Africa. It has flights to Guangzhou, Mumbai and Singapore.

 

 The Innoson assembly plant in Nnewi - Credits: Afolabi Sotunde/REUTERS
The Innoson assembly plant in Nnewi is a national success story and supplies the Nigerian army

 

Both projects could serve as a support base for the many small-scale textile and footwear manufacturers who already export to Togo, Ghana and Equatorial Guinea from their base in Aba, a city 176km south of Enugu city, the capital of Enugu State.

Meanwhile, next door to Onitsha is Nnewi, which has for decades been a hub of automobile parts and cable manufacturing. Producers there could link up with the infrastructure being built.

But without power, these plans will remain dreams on paper. Barth Nnaji, a former University of Pittsburgh professor of industrial engineering, and minister of power between 2011 and 2012, raised electricity generation to almost 5,000MW, Nigeria’s highest-ever generated capacity.

These days, he is putting finishing touches to the $530m four-turbine Geometric Power Plant, an independent power project designed to power Aba’s planned industrial revolution with an additional 1,125MW. As an embedded power plant, all power generated would remain within the city grid, with the excess going to the overburdened national grid.

Part of the funding for the power plant is due to come from a $100m injection from the Cairo-based Africa Export-Import Bank. Two other plants are also being built with the backing of General Electric, Orascom, and the China Machinery Engineering Corporation, as part of a plan to create a domino effect throughout the region within three to five years.

PRIVATE-SECTOR PUSH

“I can tell you that by next year, Aba will have uninterrupted power and it will be the first city in Nigeria to have that”, Nnaji tells The Africa Report in his country home in Enugu. “There’s a 27km gas pipeline completed, all the electrical infrastructure of 140km of overhead lines completed, four brand new 2 x 50 MVA substations have been completed, three existing Power Holding Company of Nigeria-owned substations have been refurbished for takeover by our company [Geometric Power]. I don’t run Nigeria’s power sector anymore, but people remember when I was running Nigeria’s power sector – how it was.”

Fuel consumption recovering - SOURCE: NNPC, BMIPart of the new gang of Eastern industrial revolutionaries, Nnaji has also established the Southeast Region Economic Development Company (SEREDEC) to shake up all the stakeholders working for the development of the region. “We want to work on initiatives which may not easily be undertaken by a state government but can be undertaken by the region of the five states combined, and really driven by the private sector, not pivoted on politics,” says Nnaji. “We want to look at rural networks for the region, so that there will be free movement of goods and people, to work on gas pipelines for the region.”

Given Enugu’s history of coal mining, many are arguing that the mineral should be on the front line to fire up an industrial revolution, rather than endlessly waiting for cleaner energy through gas pipelines that the federal government may never provide.

COAL IS CRUCIAL

“We’re going to build power plants here and work with those mining coal for coal-fired ones,” Nnaji insists. “The Western countries built their economies out of coal, the Chinese built their economy out of coal. America produces more than 1m megawatts – 40% of that is all coal […]. For the Chinese now, I don’t know what it is but probably up to 800,000MW, and 60% of that is coal. People will come and lecture us here about not using our good-quality coal […] I don’t know who is fooling who.”

Ufo Okeke-Uzodike, head of the African Heritage Institution, an Enugu-based think tank, agrees: “Coal is crucial to reindustrialisation in Nigeria. Nigeria is quite lucky […] we have a lot of coal. So we must use the coal. There’s no reason why the coal industry should be shut down. And now, also, there’s a way to clean coal.”

The absence of large-scale funding for local investors to tap into is also a familiar factor in the dampening of investor enthusiasm. “There was a war, the war ended and the people struggled to reinsert themselves into the corporate Nigerian state,” says Okeke-Uzodike. The region’s developmental progress “in many ways has actually taken substantial amounts of energy and resource-gathering because it is not as though you can [now] go to the bank and automatically walk out of the bank with money for seed capital.”

The eastern region is also home to Nigeria’s first indigenous car assembly plant, Innoson, which has the capacity to produce 10,000 cars annually. Innocent Chukwuma, chairman of the Innoson Group, says: “Commercial banks are not supporting manufacturers.” Talking to reporters, he said: “The only bank helping industries is the Bank of Industry, but it cannot serve all the industries in Nigeria.”

SEREDEC wants to change that. It has created the South-East Nigeria Development Fund (SENDEF) to finance industrial initiatives from the constituent state governments and the private sector. One of those already in progress includes an industrial park on 7,500ha of land in Aba that could launch in early 2018. The park will concentrate on improving exports in the leather products industry, garment industry and the machine tools sector.

“There are so many opportunities here. And once you begin to have the various industries crystallising, a lot of our people who operate industries in other parts of the country and West Africa will want to come here to build industries,” says an optimistic Nnaji.

One of the industries already making progress is Innoson. Its car and motor­cycle assembly plant in Nnewi has been churning out trucks, SUVs and saloon cars with a ‘Made in Nigeria’ seal since 2007. Some of its clients include the Enugu and Anambra state governments, which have deployed its coaches for interstate mass transit services. Innoson’s G12 series, a range of off-road light trucks, is being used by the Nigerian army in its north-east operations against the Islamist rebel group Boko Haram.

PARTS FOR JETS

Last July, Harimakan Keita, the mayor of Bamako, led a delegation on a factory tour of Innoson’s Nnewi plant and signed a memorandum of understanding for the export of 400 of its SUVs to Mali. In March, Innoson signed a deal with the Nigerian Air Force to supply spare parts for jets to fight Boko Haram. Innoson also has an Enugu plant that manufactures industrial plastics, electrical components and associated accessories.

Chinese investors, who have collaborated with the federal government in rail infrastructure, and with states like Ogun in establishing an industrial corridor, are also converging in southeast Nigeria in a private capacity. One such project is the completed Inner Galaxy steel Plant in Ukwa West, Abia State. Another Chinese firm, Hawtai, will begin to assemble SUVs later this year at the newly established Eastern Vehicle Assembling Limited plant in the Ninth Mile area, Enugu.

However, the lack of security in the region has long posed an existential challenge to industrialisation. Agitations for the secessionist state of Biafra resumed two decades ago and have picked up steam in recent years. Clashes between the army and ethnic militia groups ­occasionally turn bloody.

The issue of kidnapping of influential citizens and expatriate workers keeps bubbling to the surface every few months. “Some of our workers – expatriates from Eastern Europe – were kidnapped in the head base of Aba a few years ago,” says Nnaji. “They were released, but we had to negotiate, pay a ransom and all that. All kinds of challenges arise [without which] we would have been supplying electricity about three and half years ago.”

Local leaders in the east argue that this long list of problems – including infrastructure, finance and security – would be better tackled at a local level. They argue that, crucially, a small increase in self-determination would provoke an influx of talented emigrants.

1.9% NIGERIA growth in value expected in construction sector in 2017 - SOURCE: BMI RESEARCH

STRENGHT OF THE IGBO

Many members of the Igbo ethnic group from southeast Nigeria are entrepreneurial and travel in search of new opportunities. They have ended up as integral players in the development of other zones across Nigeria – especially in Lagos, the country’s commercial capital. In the diaspora, too, there are experts in manufacturing who choose to remain abroad.

So could a return to fiscal federalism and regional autonomy spark a mass return for many of them and a rise in fortunes for the eastern states? “If states were allowed to drive their own policies, their own activities and have their own vision outside of the centre, then I think we all would be much better off,” asserts the African Heritage Institution’s Okeke-Uzodike.

Southeast Nigeria is where the former ruling People’s Democratic Party (PDP) is strongest, so it is unlikely to see burgeoning cooperation between the area and Abuja. Enugu State’s governor since 2015 is PDP member Ifeanyi Ugwuanyi, who has a master’s in business administration, is a former member of the house of representatives, and said in August his goal is “making necessary and unrelenting efforts to sustain the business-friendly environment that already exists in the state”.

In the absence of devolution, adequate attention in the form of federal infrastructure would suffice for a region long seen as the springboard for a Nigerian industrial revolution. Can Nigeria seize the opportunity to make the trio of Azikiwe, Okpara and Ojike beam with pride in their graves?

 

From the October 2017 print edition

 

 



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