In spite of the abundant incentives that nature bestowed on Nigeria, the real sector of the economy has failed to live up to its expectation. Nigeria is at the receiving end of global trade distribution inefficiency. This is also a function of high cost of doing business in our own market as well as low application of technologies. The policy of buying made-in-Nigeria goods is still at the lowest ebb. A typical Nigerian market is crammed with over 80% foreign produce.
One can, therefore, say that the major pressure the real sector faces is the influx of imported good. The charges associated with the cost of producing locally are high. The raw materials used in local manufacturing, are mostly imported. The structure of our local industry is such that it is essentially based on an industrialisation framework of substituting the material instead of bringing the finished goods. We import the raw materials, add the local cost, and produce in small quantities.
Countries like India and China that have some technological advantage have high level of innovation and their infrastructure are well established. For this reason, their production volume is large and unit cost is low. Their big firms are manufacturing for the world. They have large units of manufacturing, and large units lead to a reduction in cost. They receive export incentives which enable them to export more. They can afford to shift their goods to Nigeria at a cheaper price, even for the same quality we are producing.
For the real sector to thrive in this economy, the country must decide areas where it has complete comparative advantage, and explore it to the optimum. Nigeria can leverage on agro-chemical and build the agric value chain. We should restore our country and rebuild our agro-allied industries. We have comparative advantage on petrochemicals. We have a lot of hydrocarbon and gas. This means that we can go into manufacturing with the by-products that come from oil and gas and become a nation that can build refineries, chemical plants, refine petroleum products and ship to the rest of the world.
While the world is shipping automobiles, we can be shipping our products. This will create balance of trade. The government has to provide social support to the real sector by reducing the tax rate, give tax holidays, give single digit interest rate and build a foundation that would ensure that what we produce are used to promote the industry.