(United Nations COVID-19 Response, Unsplash)
This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.
Author: Yinka Olatunbosun
- COVID-19 cases are rising in Nigeria, and the pandemic’s economic impacts are worsening too.
- In response, the government is working with the country’s manufacturing sector to produce PPE and medical equipment.
- This could represent a significant growth opportunity for Nigeria’s manufacturers.
Some early reports in the media on the COVID-19 pandemic were a cause for alarm. China, a leading manufacturing nation, was running out of personal protective equipment (PPE) following the unprecedented outbreak, including medical aprons, gowns and coveralls as well as gloves, masks, respirators and goggles.
China’s economy suffered, too, and that became the story of many countries around the world once the World Health Organization (WHO) announced that COVID-19 had become a pandemic. To date the disease has killed more than 745,000 people across the world, with more than 20.5 million people infected.
In Nigeria, many watched news about the COVID-19 outbreak like detached movie audiences – until the nation recorded its first case on 27 February. Still, reality did not kick in until cases began to climb in the weeks afterwards, forcing the Nigerian government at the state and national levels to impose lockdowns from the end of March. The impact of these measures was more pernicious than anticipated. Many business owners are licking their wounds following the month-long lockdown, with inevitable courses of action such as cutting down their workforces, work hours, budgets and salaries. Businesses that pose a high risk of COVID-19 infections remain grounded as their owners strategize new business models and modes of engagement.
Looking at the bigger picture, the COVID-19 pandemic has impacted the global oil economy. Oil accounts for around 10% of Nigeria’s GDP; the price war between Saudi Arabia and Russia has sent shocks to the Nigerian economy as oil sold below the $30-per-barrel mark. A Nigerian-based market research organisation, SBM Intelligence, has also published a list of industries that will be positively and negatively impacted by the pandemic, as part of a series of discussions about the impact of COVID-19 on the Nigerian economy.
Burdened by the pandemic’s negative impacts, the Nigerian government has engaged with the private sector to chart a path towards solutions. Despite its gloomy side, the pandemic offers a unique opportunity for local manufacturers in Nigeria to rise to the challenge of inadequate PPE supplies.
The shortage of PPE caused by rising demand, panic buying, hoarding and misuse has endangered many health workers worldwide. Since the start of the COVID-19 outbreak, the prices of protective gadgets have surged, prompting WHO to call on industry and governments to increase manufacturing by 40% to meet rising global demand. Based on WHO modelling, an estimated 89 million medical masks are required for the COVID-19 response each month. For examination gloves, that figure goes up to 76 million, while international demand for goggles stands at 1.6 million per month.
Initially, Nigeria received PPE from WHO and China. But the current statistics demand proactive measures in boosting the production of PPE locally. A ray of hope came when the Nigerian military said it has successfully produced a ventilator using locally sourced components, and has also begun mass production of PPE kits.
The state-run Defence Industries Corporation of Nigeria (DICON), which is responsible for producing defence equipment and civilian products, has been granted approval by the Federal Government to produce thousands of high-quality non-permeable PPE kits. Each unit consists of standardized gowns, face shields and masks to be sold at affordable rates. He said the PPEs are currently being produced in large quantities for use by Kaduna State Government and other national stakeholders. In addition, DICON engineers, consultants and medical teams have successfully produced a digital mechanical ventilator known as DICOVENT.
According to John Enenche, who leads Nigeria’s Directorate of Defence Media Operations, the newly designed low-cost machine is a simple mechanical ventilator that can deliver positive-pressured ventilation using a volume-controlled ventilation system.
“The ventilator has undergone thorough scrutiny and assessment by specialists from top ranging hospitals and experts in the country including Cedar Crest Hospital Abuja, 44 Nigerian Army Reference Hospital Kaduna, amongst others,” Enenche has said.
“It can also be used for invasive ventilation and non-invasive ventilation using an endotracheal tube and mask respectively,” he added.
Victor Ezugwu, the director-general of DICON, has given assurances that the industry has the capacity to produce thousands of these PPE kits within a short period and at least 100 ventilators per month. He disclosed that DICON will consider exporting the products after adequately satisfying Nigeria’s national demand. In the same vein, Nigeria’s Chief of Defence Staff, Gabriel Olonisakin, has urged federal and state governments to patronise the local content initiative of the Armed Forces of Nigeria.
For tailors in Aba, the commercial centre of Abia State, COVID-19 has brought a resurgence of trade in local fabrics such as cotton and polypropylene in order to manufacture PPE. With COVID-19 cases on the rise in Nigeria, the Abia state government released a NGN12 million ($31,000) grant to support tailors to make protective gear. The grant was disbursed to 100 selected tailors in early April to help them buy additional equipment, source materials and employ more people. According to Sam Hart, the director-general of the Abia State Marketing and Quality Management Agency, tailors in Aba have to-date produced more than 200,000 face masks and 3,000 overalls.
Adding to this momentum is the partnership between two Nigerian firms to manufacture PPE. The firms, Xirea Apparel and Buphalo Active Gear, recently announced their collaboration to boost local capacity for manufacturing PPE. Both firms have ramped up production of disposable coveralls, medical scrubs and caps, surgical masks and other miscellaneous garments.
Buphalo’s certified disposable coveralls and other items are manufactured in Xirea’s factory located at Trans Amadi in Port Harcourt in Rivers state, according to a report in a Nigerian newspaper.
“Xirea Apparels has retrofitted and dedicated four production lines to manufacture PPE,” said the firm’s Obinna Eneh. The company has converted all its production lines to produce disposable coveralls designed by Buphalo. “Its daily production capacity is between 2,000 to 5,000 coveralls. It can also produce 2,000 scrubs/caps and 10,000 masks daily,” Eneh added.
The Standards Organization of Nigeria has also recently inspected a NGN100 million ($260,000) facility in Murtala Muhammed Airport, Lagos which has been partly converted towards producing PPE. It is indeed a new dawn for Nigeria’s manufacturing sector.
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The Good Nigerians can learn from the disasters of the Indian SEZ policy
India is doomed and the Indian SEZs are doomed.
• The pathetic state of the exports from the SEZ is assessed by the number of non-operative units and the poor capacity utilisation of the SEZ units – information about which is in public and national interest
• The laqck of planning of the GOI is highlighted by the fact that the GOI has done no benchmarking of the operations of the SEZ per se, and the SEZ units within – for each sector with comparable peers,in India or the global competition
• If a sector, say X,exists in a SEZ in a specific maritime geography and its global export hub,is in Country A, and the GOI has not been benchmarking the operating parameters of the Indian SEZ and the SEZ units of that sector (X),every 3 years – then the SEZ units in sector X,in India,will definitely cease to exist,or be in a state of terminal decline or exist at the mercy of competitors
• With the miserable performance of the Indian Rupee,and its impact of reduction in Dollarised Rupee costs payable to the SEZ authority by the SEZ units – why are the exports from the SEZs still a failure? In addition, in several sectors, the rupee costs paid by the SEZ units to the SEZ Authority,are not the determinant for operating and financial viability of the SEZ units
• In essence,the GOI has utterly failed to provide a level playing field to Indian exporters,in terms of admin costs,operating cost neutrality,financing costs,effective logistics costs and fiscal red tape and procedures
• The centres of manufacturing excellence near SEZs (For CMT/Job work/Material and Labour sourcing) are not cost effective – as there is no synergy between the SEZ and the Industrial planning and policy
• The strategy of the GOI is highlighted by the fact that the GOI has engaged no 3rd party to analyse the inefficiency of the operating parameters of SEZs and the SEZ units within the SEZ – for each sector within it , with comparable peers in India,and the global competition
• What planning and strategy will the GOI do,if it has no formal analysis of the specific operating costs,parameters,management and other issues,which explain the dismal state of the SEZ units by sector,scale and management quality
• The dismal state of the GOI planning is that it has not properly planned the sector profile of the units in each SEZ, to ensure that the right sectors are in the appropriate geography,in the right SEZ,to minimise the net logistics costs on the EXIM chain, and minimise the inward material logistics costs – considering the future dislocations in inward and external material sources and options of transhipment and alternative export markets
• Several SEZs elsewhere invest limited equity in SEZ units and common service providers,like banks,facilities,hotels,accounting firms etc,as a demonstration of their stake in the SEZ and their strategic inputs in the planning and operation of the same – which is then used to lower the lease charges – which is completely absent in India
• All of the above is to be seen in light of the fact that the SEZ has no data of the financial or operating performance of the SEZ units,loss making units or even the financial and operating performance of the Developers of the SEZ – and is naturally not concerned with the losses or the financial performance of the SEZ units therein
• The peculiar pattern of CMT and Job workers of key sectors such as Gold and Diamond jewellers,with multiple movement of stocks at different processors o/s the SEZ – is not the norm for Gems and Jewellery SEZs or SEZ units – and represents an abnormal industrial agglomeration with a planned and structural dislocation in manufacturing and processing operations – which cannot be solely for the purposes of manufacturing and commercial efficiency.
• Information on raids and prosecutions is critical especially in sectors with high import duties (on merit mode) for inputs,customised finished goods (wherein DRI/Customs cannot assess over invoicing),frequent movements to and from 3rd party processors (which makes the case for wastages and losses in SION and disappearing materials), materials where the EXIM transit time is a few hours and the logistics costs are less than 1per cent of CIF/FOB rates, inputs and outputs with marked differences in rates of different grades of items and offgrades,warehousing artificial losses,amortisable costs ,bad debts and write offs in select SEZs (to be used for 3rd party exports or mergers to obviate tax on SEZ profits),items where the SEZ units are well aware of the sampling and test checks of the DRI and Customs at the SEZ for the inputs and outputs etc.
• The Gems and Jewellery industry is run by cartels from a particular community spread from Western India to North America,EU,East Asia,West Asia and Africa and is a well coordinated money laundering and smuggling operation from the state of rough diamonds and raw gold,to the marketing of jewellery and warehousing of processed and raw diamonds,the banking chain,raters and the chain of associate and front companies – which is all the more insidious,as all the data with DRI/ED/Customs/Interpol used by the Indian State for surveillance all originated from the overseas counterparts and partners of the Indian traders located in India (who are in many cases – in spirit the same de facto entity owners)
• The premise that Indians are the least cost labour source for the jwellery sector and their informal working style (w/o documentation,using informal labour and in slum style conditions) is an innovative marvel of Indian genius,is a pathetic deception,and the entire array of fiscal and monetary sops for this sector (including SEZ) allows the sector to generate financial buffers via money laundering,tax arbitrage,treasury operations, merchanting exports,accomodation financing ,cash financing, alternative fund transfers,FX speculation,leveraging double and layered financing,defrauding Indian Merchant exporters such as STC and MMTC,Credit insurance fraud etc. which provide the sector a pricing edge in overseas markets ( via illegal,nefarious and fraudulent means)