Made-in-Aba, gum ara­bic and Nige­ria’s eco­nomic de­vel­op­ment

Financial Nigeria Magazine - - Contents - Ola­jide Olu­tuyi, a Fi­nan­cial Nige­ria Guest Writer, is a grad­u­ate in Man­age­ment from the Univer­sity of Leth­bridge, Canada. He is Found­ing Part­ner, Green­touch Con­sult­ing Inc. Canada, Co­Founder/CEO Top-Olax En­ergy Ltd. He is on the Board of Cal­gary Quest Sch

Dur­ing my child­hood, Aba-made or made-in-Aba was a pop­u­lar cliché amongst Nige­ri­ans. The phrase re­ferred to any lo­cally made prod­uct be­lieved to be cheap and in­fe­rior in qual­ity. As a mat­ter of fact, when you got to the mar­ket, it was com­mon to hear some­one ask: “I hope say no be Aba­made?” But I was amazed when Vice Pres­i­dent Yemi Os­in­bajo re­cently said he also started hear­ing about Aba-made in his child­hood.

How­ever, this decades-long trope is no longer so pop­u­lar to­day. The man­u­fac­tur­ing po­ten­tial that emerge from the south­east­ern com­mer­cial city of Aba was never har­nessed by the gov­ern­ment. Much of the man­u­fac­tured and high-end con­sumer goods in Nige­ria these days are from China, South Korea, Ja­pan, west­ern Europe and the United States.

The Vice Pres­i­dent also posited that Nige­ria has no busi­ness with Chi­nese prod­ucts if Aba's bud­ding en­trepreneurs had been sup­ported and the city's in­dus­tries de­vel­oped. As a Na­tional Youth Ser­vice Corps mem­ber in Ow­erri, I took the op­por­tu­nity, to­gether with some friends, to visit the pop­u­lar Ari­aria mar­ket in Aba. We were con­founded at the bustling en­tre­pre­neur­ial ac­tiv­ity in dif­fer­ent parts of the city. We saw ar­ti­sans sewing chi­nos and jeans, as well as those mak­ing shoes and bags.

Un­for­tu­nately, the ad­vent of oil wind­falls in the coun­try helped a lot of mid­dle- to high-in­come in­di­vid­u­als to de­velop per­verse ap­petite for for­eign­made prod­ucts to the ne­glect of the lo­cal in­dus­tries. Nige­ria's once-vi­brant tex­tile in­dus­try was also a ca­su­alty of petrodol­lars. In a con­ver­sa­tion with one of the ar­ti­sans, I asked him why he used a coun­ter­feit la­bel of a pop­u­lar for­eign brand, Le­vis, on the jeans he made. His re­ply was not un­ex­pected. He said no one would pa­tron­ize a lo­cal brand. The re­sult of this make-be­lieve mar­ket­ing strat­egy is that a lot of bou­tiques around the coun­try are stocked with cloth­ing items made in Nige­ria but are la­belled as made-in-Spain or made-in-Italy.

It is the deficit of vi­sion­ary lead­er­ship and long-term plan­ning that has pre­vented Aba and other lo­cal in­dus­trial clus­ters from be­com­ing global man­u­fac­tur­ing hubs. Nev­er­the­less, the cur­rent eco­nomic re­al­i­ties in the coun­try have pushed the gov­ern­ment at both na­tional and sub-na­tional lev­els to start look­ing in­wards. Aba-made prod­ucts are now re­ceiv­ing some at­ten­tion.

On Oc­to­ber 1, 2016, the Abia State gov­ern­ment launched an e-com­merce site, MadeInAba.com.ng, to make it pos­si­ble for Aba-made mer­chan­dise to be re­tailed across the coun­try. MadeInAba.com.ng is a much larger mar­ket that in­cludes an on­line re­tail store and phys­i­cal stores to of­fer whole­sale and re­tail ser­vices.

Part of Gover­nor Okezie Ik­peazu’s re­forms in­clude pro­vid­ing in­fra­struc­tures for the mar­kets to thrive. Last year, mem­bers of the Leather Prod­ucts Man­u­fac­tur­ers As­so­ci­a­tion (LEPMAS) in Abia State re­ceived a N10.4 mil­lion loan from the Bank of Agri­cul­ture. The loan, aimed at sup­port­ing the stan­dard­i­s­a­tion of fin­ished leather prod­ucts, was fa­cil­i­tated by the UK’s Depart­ment for In­ter­na­tional De­vel­op­ment (DFID) and Mar­ket De­vel­op­ment in the Niger Delta (MADE).

In­dus­tri­al­iza­tion is what catal­ysed the de­vel­op­ment of to­day's ad­vanced economies. Manch­ester, Eng­land, earned the moniker of “Cot­to­nop­o­lis” dur­ing the in­dus­tri­al­i­sa­tion of the 19th cen­tury and be­cause of the large num­ber of tex­tile fac­to­ries in the city. As a mat­ter of fact, the term Manch­ester is be­ing used for some house­hold tex­tile ma­te­ri­als in Aus­tralia and New Zealand.

It was dur­ing the first in­dus­tri­al­i­sa­tion that the first-ever in­ter­city rail­way, the Liver­pool and Manch­ester Rail­way, was built. So many other gov­ern­ment in­ter­ven­tions and in­fra­struc­ture sprung up to sup­port the tex­tile revo­lu­tion in Manch­ester. A lot of in­dus­trial cities around the world share sim­i­lar his­tory of gov­ern­ment’s in­ter­ven­tion once an op­por­tu­nity was iden­ti­fied. Banks, in­sur­ance com­pa­nies and other in­sti­tu­tions stepped in to pro­vide sup­port in var­i­ous forms, in­clud­ing fund­ing.

The con­tri­bu­tion of in­dus­tries to Nige­ria's GDP has shrunk from 25.3% in 2012 to 22% in 2016. Last year, the sec­tor lagged be­hind the agri­cul­ture (24.4%) and ser­vices (53.6%) sec­tors. De­spite hav­ing a num­ber of in­dus­tri­al­i­sa­tion poli­cies, the Nige­rian gov­ern­ment has failed to suc­cess­fully im­ple­ment them. The pri­mary sec­tor re­mains the largest source of for­eign ex­change for the coun­try. Value-ad­di­tion and in­dus­tri­al­i­sa­tion are

On Oc­to­ber 1, 2016, the Abia State gov­ern­ment launched an ecom­merce site, MadeInAba.com.ng, to make it pos­si­ble for Aba-made mer­chan­dise to be re­tailed across the coun­try.

the key to rapid eco­nomic growth and struc­tural trans­for­ma­tion of the Nige­rian econ­omy.

When I ar­rived in Canada over 10 years ago, I took a lik­ing to the small hard mints, called Tic Tac, man­u­fac­tured by Italy­based Fer­rero. I re­mem­ber vividly the day I bought the first one. I glanced at the in­gre­di­ents and to my sur­prise, one of it was gum ara­bic, a nat­u­ral gum that is found in large quan­tity in North­ern Nige­ria.

Also known as aca­cia gum or meska, gum ara­bic is a nat­u­ral emul­si­fier. It is ex­ten­sively used in the food and phar­ma­ceu­ti­cal in­dus­tries; it is also used in print­ing, photography, paint pro­duc­tion, glues, cos­met­ics and many other prod­ucts. It is used to make wa­ter colour paints and shoe pol­ish. In the ce­ramic in­dus­try, it is used as an ad­dic­tive to ce­ramic glazes. It is also the most com­mon form of ad­he­sive used for the rolling pa­per in cig­a­rettes.

The Min­is­ter of Agri­cul­ture and Ru­ral De­vel­op­ment, Audu Og­beh, re­cently said the coun­try earned more than $43 mil­lion from the ex­port of gum ara­bic in 2016. First, the amount the min­is­ter was tout­ing is a drop in the ocean. At prices be­tween $3,200 and $3,800 per tonne, Nige­ria’s to­tal ex­port of gum ara­bic amounts to less than 12,000 tonnes. Su­dan, the world’s largest ex­porter of gum ara­bic, ex­ported 60,000 tonnes to west­ern Europe and US alone in 2014. In 2015, the coun­try said it had an an­nual out­put tar­get of 300,000 tonnes for 20162018.

Nige­ria cur­rently has less than 5% of the world’s gum ara­bic mar­ket. Su­dan and Chad to­gether ac­count for about 95% of the mar­ket. Since 1999, Nige­ria has lost its US mar­ket share of Grade 1 gum ara­bic be­cause it failed to meet the nec­es­sary stan­dards for pro­duc­tion and ex­port. Su­dan and Chad get 20% higher prices for their Grade 1 gum ara­bic than Nige­ria does be­cause of in­con­sis­tency in the qual­ity of Nige­ria’s gum Ara­bic pro­duce. To com­pete, Nige­ria must be known as a re­li­able source of the Grade 1, then the coun­try must main­tain that rep­u­ta­tion.

In a re­port by the United States Agency for In­ter­na­tional De­vel­op­ment (USAID), China and Ja­pan im­port Grade 1 gum ara­bic, but only from Su­dan. In­dia is a ma­jor im­porter of Nige­rian gum ara­bic, but the Asian coun­try buys mainly Grade 2, and mixed grades.

Most of Nige­ria’s Grade 1 gum ara­bic trees, the Aca­cia Sene­gal, grow in three states, Borno, Ji­gawa, and Yobe. The cli­mate and soil in these states are well­suited to the Aca­cia Sene­gal tree. Un­for­tu­nately, the Nige­rian gov­ern­ment has not pro­vided the re­quired ca­pac­i­ty­de­vel­op­ment sup­port for gum ara­bic grow­ers to pro­duce this re­source. The gum ara­bic busi­ness is im­prov­ing the liveli­hoods of lo­cal farm­ers in Su­dan.

The global de­mand for gum ara­bic is mainly due to its multi-func­tion­al­ity and medic­i­nal prop­er­ties. Ac­cord­ing to Mar­kets and Mar­kets, rep­utable for pub­lish­ing pre­mium mar­ket re­search, the global gum ara­bic mar­ket is pro­jected to reach $800 mil­lion by 2019.

The other is­sue is that Audu Ogbe's com­ment be­trays the lack of strate­gic think­ing re­quired to in­vest in adding value to gum ara­bic pro­duc­tion in Nige­ria be­fore ex­port­ing it. Ex­port­ing the raw ma­te­rial is tan­ta­mount to ex­port­ing jobs and gen­er­at­ing in­vest­ment op­por­tu­ni­ties in other coun­tries, while we con­tinue to im­port for­eign goods.

Both at the pri­mary com­mod­ity and value-added seg­ments of the mar­ket, the ben­e­fits in terms of jobs and rev­enue aris­ing from the gum ara­bic value chain are enor­mous. The gov­ern­ment should through NAGAPPEN (Na­tional As­so­ci­a­tion of Gum Ara­bic Pro­duc­ers and Ex­ports of Nige­ria) pro­vide sup­port to gum ara­bic grow­ers to help ex­pand Nige­ria's share of the in­ter­na­tional gum ara­bic mar­ket.

A strate­gic en­gage­ment of the Nige­rian gov­ern­ment in the pro­duc­tion of this re­source as well as sup­port­ing en­trepreneurs in Aba, are vi­able ap­proaches for achiev­ing the com­pet­i­tive­ness of the Nige­rian econ­omy sought by the cur­rent ad­min­is­tra­tion’s eco­nomic plan. More­over, sup­port­ing the man­u­fac­tur­ing sec­tor in the south­east­ern part of the coun­try would go a long way in boost­ing the po­lit­i­cal cap­i­tal of Pres­i­dent Muham­madu Buhari in that re­gion. In all, both the gov­ern­ment and the pri­vate sec­tor have ma­jor roles to play in achiev­ing eco­nomic se­cu­rity for all Nige­ri­ans.

Gum ara­bic

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