LEAD DEBATE ON INDUSTRIAL REVOLUTION BILL, 2016 (SB 86)
SPONSOR: Senator Bassey Albert Akpan
Mr. President, distinguished colleagues, I shall start the lead debate on this very important Bill with the adage that no country has ever become rich by exporting raw materials and in modern terms, advanced services sector. The more a country specializes in the production of raw materials only, the poorer it becomes. Industry multiplies national wealth. This Bill which was read for the first time in this chamber on 14th October, 2015 therefore sets out to diversify the economy and address the fundamental infrastructural impediments hindering production activities in the country, move the country beyond selling raw materials to a more value added processing and manufacturing one, create jobs, generate wealth, diversify the economy, boost export and broaden the tax base.
Mr. President, Distinguished Colleagues, since the early Sixties, abundant oil and gas resources have brought billions of dollars into the coffers of the country leading to a neglect of other sectors which traditionally provided employment for about 40% of the population and a nascent manufacturing industry. Revenues from oil have hampered efforts to diversify the economy, leading to economic stagnation and recently; economic recession which has brought about this all important legislation.
The main objectives of the Bill are to:
1. Accelerate the build –up of industrial capacity within Nigeria
2. Increase manufacturing contribution to Nigeria’s Gross Domestic Product
3. Drive the process of intense industrialization based on sectors where Nigeria has comparative and competitive advantages.
The implementation of the Bill among other things will:
1. Facilitate job and wealth creation
2. Provide for economic and revenue diversification
3. Ensure import substitution and export diversification
4. Broaden government’s tax base.
The Bill is therefore one of the most ambitious piece of legislation that puts together a comprehensive industrial plan to diversify the economy, achieve industrial growth and reduce poverty.
This Bill will address the age-old constraints that have persistently limited manufacturing. If enacted into law, it will build up industrial infrastructure, prioritize power for industrial use, reduce borrowing and mobilize funding for the real sector. It will also facilitate youth training in industrial skills, improve our investment climate, raise productive standards, link innovation to industry and enhance local patronage of made in Nigeria goods.
Mr. President, my respected colleagues, this Bill will provide this country with a robust manufacturing sector that will offer opportunities to Nigeria and Nigerians in the following areas –
1. Potential to become number one in Africa and top 10 globally in many industrial sectors.
2. Build up Labor Intensive Sectors.
3. Produce locally for domestic consumer market.
4. Become the manufacturing hub for ECOWAS and Africa.
5. Attract investments from East Asia, where cost of labor has begun to rise.
6. Diversify exports.
Mr. President, Distinguished Colleagues, the Nigeria Industrial Revolution Plan Bill has also evaluated and taken into cognizance the areas where Nigeria has some level of regional or international comparative advantage and their potential for economic impact, job creation and opening up of new non-oil export markets for Nigeria. These industry sectors include:-
a. Agribusiness and Agro allied: – Nigeria has the potential to increase its production and growth in the Agro allied business due to its rich agricultural ecosystem. The Bill aims to maximize the benefits from the country’s agricultural resources, boost local production to meet local demand and reduce the country’s reliance on imports of processed food products. The sub sectors in focus in this category will be: Food processing, Palm oil processing, Cocoa processing, Leather and Leather products, Rubber products and Textile and Garments. Palm oil is an important component of Nigeria’s agribusiness sector. Historically, Nigeria has been one of the top producers of palm oil globally and even today it ranks No. 3 in terms of acreage of oil palm cultivation. The legacy textiles and apparels industry in Nigeria is a strategic sector that generates a high employment multiplier ranging from cotton growers, across to fabric and garment production to marketing and sales. However Nigeria’s formerly vibrant textiles and apparels sector has experienced a steady decline since 2000 and now represents less than 1 per cent of GDP but retains hopeful potential for resuscitation due to its natural cotton endowments, large market size (domestic and regional), and legacy sector knowledge. In regards to rubber, Nigeria once had a strong local tyre production base but the exit of Michelin and Dunlop (in 2006 and 2009 respectively) to Angola, our neighbor, have left a void in the market that has resulted in the importation of large volumes of tyres to satisfy growing local demand.
b. Solid Minerals and Metals: The Bill also proposes to create a strong industry that can tap into the mining sector and create an enabling environment targeting large scale investors in order to institutionalize world-class production standards in the country. The focus here will be: – Cement, Basic Steel, Aluminum – Chemicals and Auto Assembly. Historically, Nigeria boasted of a strong automotive assembly industry, producing 70,000 vehicles in the 1980s. However, the industry declined rapidly by the 1990s, and has been steadily diminishing with production levels at 2,000 or less vehicles per year. The case for a competitive auto assembly industry however is strong. Nigeria has a large population base with significant latent demand and a growing middle class. This Bill is also geared towards revamping the automobile industry to curtail the smuggling of fairly used vehicles through our seeming porous borders.
c. Oil and Gas related industry: Significant hydrocarbon reserves provide the foundation for Nigeria to build competitive oil and gas driven industries using the country’s gas resources. The focus here shall be on petrochemicals, fertilizers, methanol and plastics. The petrochemical subsector, grounded on Nigeria’s large gas endowment is an increasingly significant part of Nigeria’s oil and gas sector. For years, the petrochemical industry underperformed as the majority of petrochemicals were produced by NNPC in their Eleme plant. Prior to its 2006 privatization, the plant was plagued by production issues and did not achieve over 23 per cent capacity utilization in the final three years of NNPC ownership. In 2006, the Indorama Group acquired Eleme and became its chief investor. The ownership change led to a remarkable turn around and the plant currently operates at close to full capacity, accounting for the majority of local petrochemical production.
d. Construction, Light manufacturing and Services: Significant opportunities also exist in the local market driven by Nigeria’s large consumer population, business demand and infrastructure needs. The existing population and stage of economic development in Nigeria presents unique opportunities. The sub-sectors in focus in this category include; Housing, Light manufacturing, (consumer and home goods), and services.
The Bill focuses on revitalizing the entire value chain from production to distribution of the above priority sectors and subsectors.
Mr. President, Distinguished Colleagues, from the above analysis, a support for this Bill is a support for the much talked about diversification of our national economy as well as the answer to the Senate debate on the economy when we came back from recess.
Finally Mr. President, Distinguished Colleagues, the Nigeria Industrial Revolution Plan which was launched by the past administration in 2014 is to say the least, the much needed catalyst to stir this country out of this economic recession. Its implementation by this administration has already been echoed by the current Minister of Industry, Trade and Investment and this Bill seeks to put in place the legal regime that will drive the policy.
I therefore, urge you my distinguished colleagues to rise up and lend your support to the speedy passage of this Bill to serve our father land as it does not have any financial implication to government.