Non-competitive goods undermine Nigeria’s BRICS ambitions – Technoglass CEO

The Chief Executive Officer of Technoglass Industries Ltd and national council member of the Manufacturers Association of Nigeria, John Aluya, speaks to ARINZE NWAFOR on Nigeria’s export prospects following the BRICS partnership and the global competitiveness of local products

Nigeria recently joined BRICS as a partner country. How strategic is this partnership to the country’s foreign trade, especially for manufacturers?

The biggest challenge we have in manufacturing is that we are not strong enough to compete in international trade because we have infrastructure deficits. By the time we calculate the cost of our production, it becomes so expensive. That is why you find a lot of people go for imported items.

It’s not that Nigerian manufacturers are not doing their bit. They are, but they are constrained by the challenges of the high cost of production created by the deficit of infrastructure because you provide your light, you provide your roads, and you provide your water. These are the things manufacturers all over the world take for granted.

They don’t have to invest in all these things. We have to invest in them to produce in Nigeria. That singular deficit of infrastructure makes us very uncompetitive in the international market.

Otherwise, we should have been able to have sufficient exports from Nigeria. For most of the things we produce, when you import them, they are far cheaper. Why are they cheaper? Because the other climes where they are producing have sufficient infrastructure that brings the cost of production very low.

Electricity tariffs have gone up by more than (250) per cent. Where in the world can you have an electricity tariff going up more than (250) per cent in one swoop? You put all the manufacturers in the so-called band A, and that band A doesn’t even supply the required 22 or 20 hours (of electrical power) as the case may be.

We still have to augment our private power, which is (petrol) generator and diesel, and the prices are astronomical. These put together make us very uncompetitive in the export market.

About joining the BRICS, Nigeria has not been admitted as a member. We are just a partner and not a member. Maybe we are there as an observer. I don’t see any advantage or what we are gaining by just being a partner or whatever.

This thing of BRICS currency is a global issue. It’s not limited to Nigeria or one country. The dominance of the U.S. dollar is so much that I don’t know what it’s going to take to break it.

The dollar has the dominant position, and it will continue to remain that way. I think the mistake was when the Organisation of the Petroleum Exporting Countries admitted to using the dollar as a benchmark of trading currency.

That was the singular mistake everybody made, and that cannot be altered anymore. We have to stay with it and live with it.

Amid these setbacks, does Nigeria stand a chance in foreign trade, especially when you consider businesses still going out there looking for external markets?

Honestly, we look out for markets from Nigeria, but how competitive are you? The only product we have that is competitive in the international market today is oil. Outside that, you cannot produce anything and compare it with any other country in the world because most of the inputs you are going to use, you still have to import them.

You have to pay tax on them and so forth. By the time you bring them together, it renders you very uncompetitive, and this is my take on the African Continental Free Trade Area.

If we open the door, Nigeria might end up becoming a dumping ground for other African countries. Let me give you an example: South Africa, Morocco, Egypt, and Algeria should have sufficient infrastructure to support their production.

If you allow AfCFTA to go free with all these countries, you produce a dumping ground in Nigeria, period. And considering the Nigerian mentality, we are always after the cheapest products.

We look for cheap products first. For the majority of Nigerians, quality is secondary. They look at the price first (and ask), “Is it cheap? If it is cheap, it’s affordable; I’ll go for it.”

If we open the AfCFTA, as we see that the way Nigeria’s economy is structured today, we are likely to be a dumping ground for other African countries, not just European (countries) now.

Recently, the Nigeria AfCFTA Coordination Office reported landing its first AfCFTA shipment of synthetic filaments by Lush to Kenya. It seems as if other countries, like Kenya, have been ahead of Nigeria regarding AfCFTA shipments out of their countries.

This Lush, hair Lush they talk about, what is the percentage of the hair Lush? In terms of dollars? What is the total value of that in our international trade volume? It’s very minute. We are just making noise because we shipped hair by Lush. Why can’t we ship yams?

Maybe because the other markets have a good supply of yam

Yes, why can’t we ship yams? Why can’t we ship plantains, for instance? I’m just talking about the agricultural side. When it comes to manufacturing, why can’t we ship finished products like plastic ware or automotive parts? Why can’t we ship our own milk to other African countries? Because we are not competitive.

We are supposed to be a big country with a competitive advantage. But we don’t have the competitive advantage because of our poor infrastructure. So, these are the challenges we are likely to face in this AfCFTA.

This (shipment to Kenya) is more like making noise; I do not want to give it a name, but it’s just a publicity stunt to me. The bottom line is, we have been dragging this on for how many years? If it is easy, why can’t we, after two years of its commencement, generalise it all over African countries? There’s nothing there. Most other African countries, particularly the small ones, don’t even know what we talk about in AfCFTA.

For instance, the Francophone countries still depend on France for whatever they want to do. They don’t care about other African countries. There are a lot of challenges, and we need to bridge them.

The first thing is to try and bridge the infrastructural gap. If we can bridge the infrastructural gap, then we stand a better chance of competing very well in the AfCFTA market.

Do you think the budget proposed by the Federal Government will be sufficient to tackle that infrastructural deficit?

How much is it? The quantum of budget for infrastructure is, to me, not sufficient. It’s not good enough. It’s not enough. And you have to take into account the level of corruption that pervades our system. If they budget, let’s say, N20 or N30tn, it will go nowhere.

It will go nowhere, because Nigeria is a big country. Our landmass is big.

So, for you to be able to develop certain areas, develop something in the South-South, South-East, North-Central, and in the South-West, you find that the budget cannot even sustain those things you plan to do. Besides that, we have overborrowed the amount of our total earnings. You use it basically to pay interest on the debt that you borrowed—not the principal, but the interest on it. That’s a big challenge.

That’s why my advice to the government is to put its foot down and say no more borrowing. No more borrowing, because whatever we borrow today, we are mortgaging the future of the generation yet unborn. That’s what we are doing.

Putting forth that argument about limiting borrowing, the government would point to the fact that they borrow to build infrastructure. Do you agree they can’t build without borrowing?

No. Everything the government should do—if we want to be prudent—should be on ‘Build, Operate, and Transfer,’ particularly when you talk of road infrastructure.

The government doesn’t need to go and borrow money to construct roads or a rail line from here to Sokoto. You allow an operator to take charge of it.

The operator builds the roads, operates them for a so-so number of years, and then transfers them to the government after such a number of years. If you want to build a road from, say, the road going from Lekki to Calabar so we don’t need to go and borrow money, the road can be built by a private operator, and in so-so number of years you recoup your money.

After recouping their money, they transfer the property to the government, and it becomes the government’s property.

Interesting. So, these are long-term strategies?

These are the ways you avoid borrowing. Not every time (the government) keeps borrowing. I hate mortgaging the future of the children yet to be born. I will tell you, all the debts that were borrowed during President Muhammadu Buhari’s time, Buhari left, and those debts remain.

Our leaders should stop borrowing. They should focus on getting credible enterprises to whom they will give the roads to develop.

Those people will be the people bringing the money. They will be the people doing the construction. They will be the people operating it for X number of years to recoup their investment.

After recouping their investment, the road becomes property of the Federal Government of Nigeria. That is how most countries develop, not just with borrowing and borrowing every day. I am tired of borrowing.

Borrowing is killing us. It’s eating us, and we don’t know.

The West is pushing us to borrow so that they can have a grip on our economy. And that’s what our leaders don’t try to see, because once you are indebted to me, I will be able to dictate to you.

That is why they have been able to dictate to us now, because they tricked us into borrowing from them. You remember during the term of (President Olusegun) Obasanjo that all our foreign debts were paid?

Especially with the debt forgiveness?

Yes, after that we became free. But within 10 years of that (debt forgiveness), we even borrowed bigger than what we paid off. So, I don’t know what is going to happen. It’s a challenge for me, and I am not happy as long as we say we have to borrow to do infrastructure. You don’t need to borrow to do infrastructure; you concession infrastructure, and that will build infrastructure for you.