6 challenges facing manufacturing in Nigeria & Ghana
I remember telling my uncle about my interest in manufacturing and he looked at me and said “Anyone that wants to do manufacturing in Nigeria has to have the heart of a lion”. Basically you have to be strong to be in this industry.
This is because, in addition to the problems that plague businesses in Nigeria and Africa in general, there are some challenges that are specific to the manufacturing industry.
I have spent time working with and interviewing manufacturers in Nigeria and Ghana, and here are six challenges facing manufacturering in Nigeria and Ghana (in no particular order):
Depending on what stage you are in your business – you could just be thinking about making your own product or you might have started producing and you are planning on expanding your operations. Whatever the case is, you will need some money to kickstart your business. Unfortunately, money is not readily available for manufacturers in the region. When it is available through bank loans, the interest rates are so high (25% – 40%). At such rates, even if you made a profit, you will use a good amount of that profit if not all to pay your debt to the banks.
- Operations & management.
When running a business, you want to do two things – maximize your profit and minimize your costs. It’s that simple. The same goes for running a factory, a plant or a small-scale operation in your home. To achieve this, a company has to operate efficiently. This is an issue with a lot of African manufacturers – they do not utilize practices that make them operate efficiently – production forecasts, labour management, inventory management to name a few.
- Lack of Properly-trained workers
A factory is only as good as the people that run the factory. There is a lack of properly trained employees that have the management skills to manage a team and technical skills to operate machinery and build products with their hands.
- Infrastructural issues
I can’t talk about the issues facing all businesses in this region without talking about infrastructural challenges. The main issue that hinders manufacturers is the access to uninterrupted power supply. The use of alternative power such as Diesel generators in Nigeria and Ghana increases the cost of production by a magnitude which discourages manufacturers. Should the government grant manufacturers license to generate their own power? Other infrastructural issues include bad roads, poor storage facilities. These all extend the time it takes for a manufactured product to get into the hands of the consumer.What do you think about Solar Energy for manufacturing in Nigeria
- Distribution & Logistics
Manufacturers that do not have well-established distribution channels usually have difficulty selling their products. The retailers in Nigeria will sometimes demand that manufacturers or wholesalers pay them ahead of time to stock their goods at its retail outlet. This can be very discouraging to the SMEs that are just starting their business and do not have the proper distribution channel to get the product to market.
Lastly, and this ranks high as one of the main issue for local manufacturers – the fact that people perceive locally-made products as inferior to imported ones. If the people that are supposed to be buying the goods do not see the product as valuable, then it will be hard convincing them to buy it. I see this as a marketing issue and the mindset has to be changed so that products of the same quality are seen to be as valuable as their imported counterparts.
So what do you think is the biggest issue facing manufacturers in Nigeria and Ghana? Take the poll below.