Economic Recession Woes Deepens in Nigeria

ICMS, Inc Reports
Tom Okure, Ph.D
February 28, 2017

Nigerian projected growth rate for the full year of 2016 was -1.51% according to report data from the National Bureau of Statistics.  More specifically, Gross Domestic Product (GDP) declined in the fourth quarter of 2016 by -1.30%; the oil sector witnessed a production decline of -12.38% on a comparative year on year basis; the agriculture sector experienced some growth at 4.03% in the fourth quarter of 2016 which reflects a nominal reduction of 4.54% growth in the third quarter.

The manufacturing sector declined over the year by 4.32% even though it reflected a quarter to quarter slight growth of 1.89%. The services sector, which experienced a growth rate of 4.78% in 2015 and which accounted for 53.55% of GDP in 2016, mirrored a decline in growth by -0.82% over the year.



Read the details:

4TH QUARTER 2016 NIGERIAN GDP REPORT ISSUED BY THE NATIONAL BUREAU OF STATISTICS

Blame automation technology not the North American Free Trade Agreement (NAFTA) for the loss of manufacturing jobs in the US

It is very doubtful that increasing protectionist policies as currently advocated in the US can overcome the forces of automation in manufacturing. 


ICMS, Inc Reports
Tom Okure, Ph.D.
February 20, 2017
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Surveys and research findings strongly indicate that the loss of manufacturing or factory jobs in the United States (US) is a consequence of increased automation rather than international and regional trade (NAFTA). 

Robots in action on the Jaguar XE production line in Solihull

Under these circumstances, it is very doubtful that increasing protectionist policies as advocated by the current Trump administration would overcome the forces of automation. Research results over a long period shows that 80 to 88 percent of factory job losses in the US are attributable to robots (automation) and other corporate decisions that lessen the need for human labor input in manufacturing.

The North American Free Trade Agreement (NAFTA) is an agreement among the United States, Canada and Mexico designed to remove tariff barriers between the three countries. The Trump administration blames NAFTA for US job losses and is beginning new negotiations with its Canadian and Mexican neighbors designed to improve the trade level playing field in favor of the US.

It should be clearly pointed out that US labor force and employment levels are generally affected by many domestic factors including economic growth; demographics; cyclical and structural factors; labor unions; education and training; innovation and industry consolidation factors.

A November 2016 CBS news report stated that “A study at Ball State University’s Center for Business and Economic Research …. found that trade accounted for just 13 percent of America’s lost factory jobs. The vast majority of the lost jobs - 88 percent - were taken by robots and other homegrown factors that reduce factories’ need for human labor.”

Despite the overwhelming research evidence, surveys of displaced factory workers, most of which in favor of Trumps new protectionist agenda for the US tend to blame NAFTA and global trade between the US and other countries rather that factory automation for the loss of jobs. Nevertheless, people surveys indicate that many displayed workers do welcome factory automation for various reasons including increased skills training it offers employees to operate and maintain the robots, increased efficiency in assembly line processes and the reduction of injuries in manufacturing processes as a result of the use of robots.   

The campaign and eventual election success of Donald Trump as US president was centered on faulting countries like China and Mexico for stealing millions of jobs from the United States. There has been allegations by Trump that “we don’t make anything anymore.” But according to many experts, the truth is manufacturing is still flourishing in America.  According to The Associated Press, “the problem is, factories don’t need as many people as they used to because machines now do so much of the work.”

Ford motors is one of the first manufacturers
to wholesomely accept automation

The desire and quest to produce more efficiently with fewer human input has a very long history in US manufacturing. The US automotive industry and more specifically Ford motors is one of the first manufacturers to wholesomely accept automation.  Over the decades, the global automotive manufacturing sector has witnessed and benefited from enhanced technological improvements in robotics. Today, the automotive industry utilizes more precise and more multi-functional and smaller robots in automotive manufacturing applications.  Globally, automation has become indispensable in the manufacturing process.

Rising costs connected with next-generation automotive materials, safety systems and skilled labor coexist alongside a need for manufacturing equipment to accommodate product changeovers. From parts, press and paint shops to assembly and inspection, there has developed over the decades a convincing case for flexible, cost effective automation solutions at every step of the automotive manufacturing process.

Read and learn more:

Mexico stealing factory jobs? Blame automation instead

Rise of Robots: The Evolution of Ford’s Assembly Line

British Airways Joins the list of foreign airlines refusing to utilize Kaduna Airport during the Abuja’s Nmandi Azikiwe International (NAIA), airport runway rehabilitation.

Despite Nigerian government assurances, the number of foreign airlines rejecting the option of flying into Kaduna airport over the six weeks of runway repair at Abuja continues to grow. 

ICMS, Inc Reports
By Tom Okure, Ph.D
February 17, 2017
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British Arways

British Airways is joining the list of foreign airlines including South African airlines, Air France and Lufthansa in declining to operate from the Nigerian Kaduna airport after March 8, 2017 as recommended by the Nigerian federal aviation ministry. The Nigerian aviation ministry states that it needs six weeks from March 8, 2017 to enable it to carry out runway repairs at Abuja Nnamdi Azikiwe International Airport. 

Earlier in the month, the German carrier Lufthansa, had also indicated that it would not fly to the Kaduna airport during the closure of the Nnamdi Azikiwe Airport (NAIA), Abuja. 

A British airways spokesperson said that during the closure of the Nnamdi Azikiwe International airport, the airline would refund airfares to passengers who are billed to travel with the airline from Abuja. 

Nnamdi Azikiwe International Airport (NAIA), Abuja

Apart from providing passengers with a full refund, another option available to passengers include rebooking their flights to an alternative date to and from Abuja when the airport is open. 

While some of these foreign airlines have opted in favor of completely suspending their service to Nigeria during the period of Abuja runway repairs, others have decided to continue serving Nigeria through Nigeria's Lagos Muthala Muhammad International Airport increasing operational pressure on the airport which also has its own operating challenges including deteriorating runways.

Despite the assurances of the Nigerian federal authorities regarding the temporary closure of Abuja airport and the operational, security update and readiness of the Kaduna airport for the resurfacing repair work at Abuja, the number of foreign airlines rejecting the option of flying into Kaduna airport over the six weeks of runway repair at Abuja continues to grow. 

Read more:

British airways to refund affected booked passengers doing closure of Nmandi Azikiwe International airport, Abuja

South African airways cancels flights in Abuja Nigeria during runway repair

U.S. President Donald Trump on Monday February 13, 2017 reaffirms its commitment to leaders of African two major economies, Nigeria and South Africa

U.S. President Trump

ICMS, Inc Reports
By Tom Okure, Ph.D
February 14, 2017
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President Donald Trump on Monday February 13, 2017 spoke on the telephone with leaders of African two top economies, Nigeria and South Africa reaffirming its commitments. Trump invited President Buhari of Nigeria to visit the USA at an appropriate time that is convenient in the future. He promised President Buhari assistance in its fight against Boko Haram.

The discussion with Nigerian President Muhammadu Buhari centered on a new possible arms deal to help Nigeria better combat terrorism. The US Congress has been reviewing Nigeria’s request to sell it military aircraft.

Nigeria's President Buhari

The presidency in Nigeria said "President Trump assured the Nigerian president of U.S. readiness to cut a new deal in helping Nigeria in terms of military weapons to combat terrorism."

South African President Zuma

The discussion with South African President Jacob Zuma centered on reaffirming their commitment to strengthening their current strong bilateral relations between the two countries especially in the area of trade relations. It will be recalled that when Trump was elected as US president in November 2016, President Zuma had sent a congratulatory message to Trump indicating his interest to build on the existing relations between the two countries, including promoting peace and security, especially on the African continent.

Trump has been reaching out to various world leaders by telephone recently. For instance on January 28, 2017 he spoke to Russian President Vladimir Putin and also to Australian Prime Minister Malcolm Turnbull, when he (Trump) allegedly abruptly cut the phone call short by hanging up on Turnbull.

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Dangote Group is set to resume tomato processing in its Kadawa factory in Kano State of Nigeria.

Dangote Group Kadawa tomato factory in Kano state is set to resume operations.

ICMS, Inc Reports
By Tom Okure, Ph. D

February 4, 2017

Alikote Dangote is founder and
president of Dangote Group

African Manufacturing and Industrial Giant "Dangote Group" has announced it is set to resume tomato processing in its Kadawa factory in Kano State of Nigeria. In preparation to restart the Tomato Processing Factory Alhaji Abdulkarim Kaita, who is the Company Managing Director, disclosed recently in an interview with the News Agency of Nigeria in Kano that the company has begun a tomato farms surveys in six states which include Jigawa, Katsina, Kaduna, Kano, Gombe, Plateau and Sokoto. The surveys are supposed to ascertain the extent of the availability of tomatoes in the farms of these major producing states.

The company indicates it will need about 40 trailers of tomato daily to meet its processing needs in the factory when the farmers start harvesting their tomatoes. In preparation for the start of production at the factory, the company engaged more than 50 new employees who will focus on conveying the fresh tomato inside the factory for processing and about 30 Industrial Training (IT) students are alleged to have also been employed by the company as quality control inspectors to assess the quality of the tomatoes prior to processing.

It will be recalled that last year the company was forced to suspend its production of processed tomatoes because of insufficient raw materials input and an outbreak of a pest popularly known as “Tuta Absoluta’’ which destroyed tomato farms in Kano and five other tomato producing states in Nigeria. The massive requirement of tomatoes needed as raw material input at the factory also caused shortages of tomatoes throughout the country.

 Commentary and Policy Recommendation

The announcement to resume the processing of tomatoes by the Dangote Group is a welcome development for Nigeria as it adds to the internal production capacity of this vital commodity that is widely used in food preparation by Nigerian families. Internal production of tomato paste etc., in Nigeria will help reduce the importation of this vital commodity by the federal government and save the country on badly needed foreign exchange at a time of recession by helping to reduce or end the importation of processed tomato paste into the country.

More than 40,000 individual farms are involved in the farming of tomatoes in the six identified states and would benefit from selling their tomatoes to the Dangote factory. Logistically local employment will be stimulated in various ways as local people will be involved in supplying things like baskets, fertilizer and other needs of the farmers. Nevertheless, we believe that rather than buying the raw materials from the individual farmers as is planned, a better policy approach would be for the Dangote Company to retain the services of the tomato farmers as its agents organized into “tomato farm cooperatives” to grow, harvest and sale the tomatoes back to Dangote Company at an assured and guaranteed annual price. 

This approach would create both employment for the farmers and guarantee them some level of expected annual income for their tomatoes. The Nigerian Federal Government in partnership with the Dangote Group would fund the creation of cooperative farms from among the individual farmers, provide the cooperative farms with the technical assistance and know how needed to grow and harvest pest free high yield quality tomatoes on a year round basis for harvesting, sale to and processing at the company’s Kadawa factory in Kano State. 

For additional reading see: 

Premium Times News: Dangote tomato factory resume production

Information Nigeria: Dangote tomato factory set to resume operation