Made-in-Nigeria campaign: How laxity in the application of executive orders 003,005 undermines manufacturing locally

With a population of over 200 million, Nigeria is blessed with abundance of labour. One reason it is regarded as one of the largest markets in Africa. Aside from its huge population, the country has abundance of natural resources, including oil and gas. However, Nigeria’s dependence on oil exports has made its economy vulnerable to fluctuations in global oil prices. To mitigate this, the country has put in place a lot of programmes and projects to diversify its economy. One of such efforts is the passage of Executive Orders 003 and 005 in 2017 and 2018 to grow and buy local products and contents. But the government seems to be good at formulating policies without corresponding political will to implement them writes Assistant News Editor, GBENGA SALAU.

Seven years after Executive Orders 003 and 005 were signed by acting President Yemi Osinbajo and President Muhammadu Buhari, it has been motion without movement in the implementation of the orders despite the huge potential they possess in boosting the country’s manufacturing sector and export opportunities.

The immediate past administration, with the signing of the two orders, put out a posture that it meant business promoting local products and services, especially as the two orders were signed with a time gap of less than nine months in between them.

While Executive Order 003 was signed by Osinbajo, as an acting President on May 18, 2017 and took immediate effect, Executive Order 005 was signed by Buhari on February 2, 2018.

Executive Order 003 was very emphatic. It states that all Ministries, Departments and Agencies (MDAs) of the Federal Government of Nigeria shall grant preference to local manufacturers of goods and service providers in their procurement of goods and services.

The order also provides that Made-in-Nigeria products shall be given preference in the procurement of listed items and at least 40 per cent of the procurement expenditure on these items in all Ministries, Departments and Agencies (MDAs) of the Federal Government of Nigeria shall be locally manufactured goods or local service providers.

Government, through the order, lists items that should be considered to include uniforms and footwear; food and beverages; furniture and fittings; stationery; motor vehicles; pharmaceuticals; construction materials; and information and communication technology.

The order also states that within 90 days of the take off, the heads of all MDAs of Federal Government shall assess the monitoring, enforcement, implementation, and compliance with the Executive Order and local content stipulations in the Public Procurement Act or any other relevant Act within the agencies.

The order further provides for proposal of policies to ensure that government’s procurement of goods and services maximize the use of goods manufactured in Nigeria and services provided by Nigerian citizens doing business as sole proprietors, firms, or companies held wholly by them or in the majority.

The order states that within 180 days of the order, the Minister of Industry, Trade & Investment in consultation with the Director-General of the Bureau for Public Procurement shall submit to the President, a report on the Made-in-Nigeria initiative.

“This report shall include specific recommendations to strengthen the implementation of Local Content Laws and local content procurement preference policies and programmes.

“For the purpose of this Order, ‘local content’ means the amount of Nigerian or locally produced human and material resources utilised in the manufacture of goods or rendering of services.”

Similarly, Executive Order 005 was about the recognition it gave to the vital role of science, technology and innovation in national economic development, particularly, in the area of promoting Made in Nigeria goods and services. Tactically, the Executive Order 005 aims to harness domestic talents and develop indigenous capacity in science and engineering for technological innovation needed to drive national competitiveness, productivity and economic activities.

Commenting on the two executive orders, former CEO of Grand Cereals Limited, Nigeria, Mr. Alex Goma, said in principle, the orders had good intentions, but intentions without breaking down how it is going to be executed leaves lots of gaps.

“I have seen government agencies using Innoson vehicles and there are agencies buying foreign brands.”  Also x-raying the two executive orders, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, observed that their purpose is to support indigenous service providers, contractors and manufacturers.

“And it is a way of conserving foreign exchange and ensuring that our domestic professionals are properly engaged as well as manufacturers are patronised.”
Yusuf, however, stated that the implementation has been extremely very poor. “There is no evidence of monitoring and satisfactory compliance with the orders. There are so many things, which should be sourced locally that are being imported such as furniture items, vehicles, printing and engineering, software procurement.

“I believe that if there was better compliance, Nigeria indigenous investors would have benefitted tremendously from the procurements because government is a very big spender and one way to support private sector development is for government to patronise goods and services provided by Nigerians but the compliance level has been extremely low.”

No wonder, almost seven years after the orders became operational; Nigeria’s export has been trailing import behind with over 80 per cent of export being petroleum products and raw materials.

Production hall of a manufacturing company

This is a huge reversal from the trade deficit of N1.2 trillion reported in 2022. A further segregation of the 2023 trade data revealed that Nigeria’s total imports grew to N35.9 trillion in 2023, from N25.5 trillion recorded in 2022, according to data by the National Bureau of Statistics.

A breakdown of the data showed that in the first and second quarters of 2023, total imports stood at N6.4 trillion. It increased to N9 trillion in the third quarter and again to N14 trillion in the fourth quarter.

By volume, manufactured imports topped the chart with imports worth N18.3trn. Agric imports stood at N2.2 trillion while imports of raw materials totalled N3 trillion.

Of note, however is that much of Nigeria’s exports valued at N35.9 trillion in 2023 were under the category of crude oil, which constitute N29 trillion while exports of other oil products stood at paltry at N3.5 trillion.

Nigeria’s foreign trade deficit widened to N1.94 trillion in 2021 compared to a deficit of N178.3b recorded in 2020 as the cost of importing commodities exceeded the value of its export.

According to the report by the National Bureau of Statistics (NBS), foreign trade grew 58 per cent to N39.8 trillion in 2021 from N25.2 trillion the previous year.

In 2021, Nigeria imported N20.8 trillion worth of goods, 64 per cent higher than N12.7 trillion recorded in the previous year. On the other hand, exports jumped 51 per cent to N18.9 trillion. Owing to the country’s dependency on imports, Nigeria constantly needs foreign currency, notably the US Dollar, which put pressures on the naira.

The Executive Director of Civil Society Legislative Advocacy Centre (CISLAC), Auwal Ibrahim Musa, stated that Nigeria has abundance of every resource, both human and material, yet there are many products, goods and services that are imported into the country with unreasonable amount of money.

“If we have functional industries and companies that produce enough goods and services in the country we would not be importing products that are initially produced here.”

Yet, the two executive orders were principally meant to promote patronage of goods and services produced in country, but the political leaders who had courage to sign the orders never had the will to enforce and promote them. This is because they violated the orders themselves by using imported items with local substitutes or did not make their subordinates fall in line when going against the dictates of the provisions of the orders.

This is why Yusuf believes if the orders had been effective, it would have impacted the country positively, helped capacity building, conserve foreign exchange, improved skills of indigenous professionals and manufacturers and the economy would have benefitted tremendously.

Deserving of mention is that orders to some stakeholders were the culmination of efforts geared towards promoting local products under the several ‘Buy Made-in-Nigeria’ campaigns, which were initially championed majorly by those not in government, but political leaders like Senator Ben Bruce empowered with their genuine interest and pushed vigorously. And the campaigns have been on since early 2000.

Even when those in government aligned with the campaign, it is usually with lip service. This is because while they talk about the importance of buying made in Nigeria products, yearly budget provisions and contract execution usually revealed that they go for imported or foreign products that have local substitutes.

Good examples were the provisions in the 2017 budget. In the 2017 Federal Government budget estimates for the State House, there were provisions for purchase of three 16-seater Hiace Buses at N43.2m; purchase of three Toyota SUVs for N100.8m; purchase of three 33-seater Coaster Buses for N54m. Also, in the budget for the Bureau of Public Enterprises, there was a provision for purchase of two Toyota Corolla vehicles for project monitoring.

There was also a recent case, when lawmakers bought over 500 units of Toyota Landcruiser, with each of the SUVs costing N160m, totalling N57.6 billion. Many Nigerians were taken aback by the action of the legislators wondering why they could not patronise local products especially as the naira was under pressure then.

Musa underscored the importance of government living by example because the responsibility of the citizens lies in its shoulders. He maintained that living by example brings enormous opportunities for the government both locally and internationally, as investors will have no hesitation to come into the country and invest resources because they believed, trust and have confidence in the government.

He added: “Democracy demands that government must be accountable and transparent in its dealings so that there is sanity and rationality in policy decision making that will have a meaningful impact on the lives of the citizens.

“Moreover, government must live by example because the future generations of leaders depends on the quality of leadership and their decisions, government have to be responsible enough in order for future leaders to look up to them for inspiration.”

Also commenting on the role of leadership, Goma stated that leaders should take the lead in the adoption of Made-in-Nigeria products because leadership is about inspiring trust. “People follow what you do,” he added.

And the gaps in the non-implementation of the executive orders are reflected in the statistics around the country’s manufacturing sector. According to the Manufacturers Association of Nigeria (MAN), in 2023, 335 manufacturing companies became distressed while 767 others got shut down.

As a result, MAN stated that the capacity utilisation in the sector has declined to 56 per cent, especially as interest rate is effectively above 30 per cent, foreign exchange to import raw materials and production machine inventory of unsold finished products has increased to N350b and the real growth has dropped to 2.4 per cent.

Similarly, the manufacturing sector also under-performs in its contribution to exports as the sector accounted for only 6.4 per cent of total exports recorded in 2021 compared to other countries where manufacturing accounts for over 70 per cent.

Workers on duty at an industrial plant

Presenting a paper recently at an event organised by the Nigerian Export Promotion Council, the Director-General of the Manufacturers Association of Nigeria, Segun Ajayi-Kadir, said Nigeria has not done well in global export trade as it ranked 52nd among nations.

He added that the country has also not done well domestically in terms of the share of non-oil and manufactured exports to total exports. He mentioned factors militating exports to include the high cost of local and imported raw materials, insecurity across the country, including industrial areas, and dearth of skilled manpower.

Apart from the local companies, several foreign operators announced plans to exit Africa’s biggest economies last year. They are GlaxoSmithKline Consumer Nigeria, Equinor, Sanofi, Bolt Food and Procter & Gamble.

“It is not only the multinational companies that are leaving but the indigenous ones as well who are also finding it difficult to survive and they need to be supported,” Adeola Adenikinju, a professor of economics and president of the Nigerian Economic Society, said.

“The government must do everything they can to communicate with the people and industrialists to know their plans to take the economy from this difficult position and to find a way to reduce the harsh business environment,” he added.

For better impact moving forward, Goma said: “On appointments and protecting roles, we should review our skills and talent development programmes to ensure our people can compete internally and globally. From consumption perspective, there are certain sectors which would have benefitted more from the policy. In the Fast Moving Consumer Goods (FMCG) space, government impact will be limited because consumption is expected largely from the general public.

“We import virtually everything, we should apply tariffs and incentives to protect and support certain goods that we should produce. It is not just about the goods but also building technical capacity for higher level manufacturing.” 

Yusuf also argued that to ensure the executive orders make the impact would be a product of shared responsibilities with the citizens, and the local players contributing.

“The citizens, the domestic manufacturers as well as the professionals have roles to play to ensure compliance. They have a role to play in ensuring and monitoring compliance. Where there is no compliance, they can escalate it to the higher authorities.

“Luckily, the president has set up a committee now to monitor compliance and adherence to government policies. This is to ensure that government policies announced are properly implement and where they are not, they can escalate to appropriate authorities.

“So, we cannot leave everything entirely to government, the private sector providers, our professionals have a responsibility to support the government in the monitoring of compliance of these executive orders, as it is to the benefits of indigenous manufacturers, service providers and professionals , and of course with the benefit of the larger economy. So, it is a shared responsibility to ensure its success,” the ex-LCCI DG stated.

Yusuf also believed that it is necessary for the states to domestic these executive orders because it is limited to the federal government institutions and MDAs at the federal. The state governments do not have it and they should replicate these policies and domestic and ensure that whatever contracts they are giving out including consultancy, indigenous players are given priority, that way the economy will be better for it, jobs will be created, skills will be created, capacity will be developed and that is good for the economy.

On if taking a step forward of sending the executive orders to the National Assembly for legislative backing would make any difference, Yusuf argued that legislative backing could help implementation and compliance because this is what actually made the difference with respect the national content policy in the oil and gas sector.

He noted that the policy was able to gain traction largely because there was a legislative backing to it. “So, all contractors and investors in the oil and gas sector, they knew that they had to comply because t here was a national content act that was put in place and made a whole lot of difference and for this other issues. So a legislative backing will not be out of place to enhance or facilitate compliance and implementation of the orders.”