“Cost Of Production Behind Products' High Cost”

For a long time now Nigerians all over the country have been complaining over the high cost of essential products such as rice, sugar, beans and the like. According to someone who should know, by virtue of his vantage position the high cost of producing and transporting goods all over the nation is the culprit. He is none other than Shuaibu Idris, the Deputy Managing Director of Dangote Flour Mills Plc. In this frank and dispassionate chat, he expresses his view on the state of Nigeria's manufacturing sector and related issues.


What is your assessment of manufacturing sector vis-à-vis the growth of the economy?
I want to say that the growth potential of any country ids determined by the number of industries in the country. And the prosperity of the industries is within the content of that economy. Here in Nigeria you can divide the Nigerian economy into sub-sector as banking, manufacturing, mining, the oil and gas industry sub-sector and the services sub-sector. Each of these contributes to the growth an development of the economy in the world…
How can we get food, with particular reference to flour available to the people at cheaper rate?
Let me start with the mining, this sector of the economy has been so enormously blessed with quite a lot of mineral resources; tin, gold etc. However, let me state that the mining sub-sector has not grown significantly as it should. If the mining sector is sufficiently made lucrative and enticing as the oil and gas to foreign investors, Nigeria would be making huge money from the sector. And if you come to the manufacturing sector, I think it has done a little bit better in the sense that we started from the scratch.
It is also what I would describe as a dumping ground where everything we were taking was imported. This was so during the General Gowon regime and later we has what you could call import substitution industries, where you have manufactured goods imported and the finishing completed in Nigeria. Then again we moved to a situation, where we have goods completely manufactured in the country. In that situation, we have those in the textiles, where the cotton obtained in Nigeria, the knitting and finishing. Also we did not have cement production though not quite sufficient but today we are better even though there is need to improve on what is one ground.
The man on the street seems to be deprived of these goods at lower cost why?
Basically, I think there are one or two things that need to be done to make these things available to the people. When we look at the cost of producing these goods which of course has become a serious concern for the industries and except they are tackled headlong, they would not be favourably addressed. Let meat this junction point to the fact that we need to face the electricity issue; when the government is able to address the energy issue, then at least 10 to 15 percent of producing every product in Nigeria would reduced by that amount and that on its own will bring down the cost on the consumers.
Another aspect of the problem is the cost transportation; everything you transport has to be by truck. If I am going to take a bag of flour from Lagos to Maiduguri by truck, I am going to pay an average of N300,000 per truck, per trip for about 600 bags of such commodities of either sugar, rice or flour which makes about 30 tons. That brings about the average price per bag to N500. but if there is a rail linkage between Lagos and Maiduguri and is able to transport such commodity for about N50 to N100 per bag and instead of N500 per bag, you can then imagine when you have a rail perfectly working, why would you not be able to save the huge cost of sending these product to other parts of the country.
Some have said your company concentrate on packaging finished products and has no capacity to produce flour on its own?
Whenever you are succeeding, the cynics will paint you black and in an attempt to paint you black they will grow mad at you. Someone who brings in grains (wheat) and the wheat goes through processing and atleast we have four mills, one in Lagos, Ilorin, Calabar and Kano….
   
    (To be continued next week)