We hail our digital companies but the fact remains that most would not create enough jobs without strong physical components. In the late 1970s, General Motors used close to one million workers to serve about 300k customers. Today, Facebook uses just sub-40k workers to serve more than 4 billion customers. Apple uses about the same number, but Foxconn which Apple relies upon on the physical elements of its business has excess of one million in its payroll.
That brings me to the big news that Nigeria’s manufacturing sector is further contracting. Besides the impact of Covid-19, the sector has been struggling for years. The border closure did not help the very small manufactures who focused on the niche markets in the western and central African regions. Covid-19 only exacerbated a trajectory that has been ongoing for years. Of course we do know the big elephant in the room: electricity – the weakest link in Nigeria’s manufacturing sector.
The Manufacturing Purchasing Managers’ Index (PMI) in September stood at 46.9 index points, indicating a contraction in the Nigerian manufacturing sector for the fifth month.
This was disclosed by the Central Bank of Nigeria (CBN) in its September PMI report released on Wednesday.
According to the report, four out of the 14 sub-sectors surveyed reported expansion (above the 50 per cent threshold) in September.
It listed the expansion order as electrical equipment; transportation equipment; cement and nonmetallic mineral products.
So, the point is this: Nigeria needs jobs and most of those jobs are not going to come from our digital startups. Rather, the old industrial players would be expected to provide many assists as in the game of football. Aba shoe sub-sector needs to be fixed just as many clusters across the nation.
Aba could be great and has the sparks of genius to compete with Italy and Spain in the leather industry. I have offered some clear strategies to redesign the sector. Establish a vehicle that will galvanize the different shoe making entities into brands. Each brand will push for higher quality through better tools and training and advocate more collaboration among players. A requirement that a brand buys from the entities will be established. It will be similar to a merchant buying farm outputs from farmers even as the merchant has provided seeds to the farmers at planting season. Through strategic advertising and marketing, Aba will reach its promise.
Nigeria needs to work!