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By Ikechukwu Iroha.
Let me start the analysis by defining what a Cluster means so we can appreciate why it is important we build on our gains of having a leather and Garment Cluster in Abia State
A cluster is a geographical concentration of inter related industries that are engaged in the manufacture of similar products.
Recently, MadeInAba has become a trademark for locally manufactured shoes & bags. The Aba Leather and Garment Industrial City has taken off. The Industrial City is located at Umukalika in Obingwa LGA within the greater Aba Metropolis.
The City is a full service Public Private Partnership Initiative wherein the Abia State Government is providing the land and infrastructure while a Private Developer is providing the buildings and will go ahead to manage the offtake.
Facilities will include latest equipment and machinery for processing finished leather goods, industrial clothing line management and an atmosphere for enterprises to thrive.
The Industrial City comes with a Waste Recycling Power Plant to Power the entire complex and guarantee 24hr power supply.
In Today’s Nigeria, assessing foreign exchange has become a bumpy ride. Forex has compounded the challenge faced in the area of importation of foreign goods. The difficulty has resulted to increase in the prices of goods.
Increment in the prices of goods has a devastating effect on the economy, it can as well result in scarcity of products. Law of demand makes it clearer; the higher the price, the lower the quantity demanded and the lower the quantity supplied to the market. Consumers are bearing the incidence of the price control.
Any Government that wishes to succeed in this economic recession must look inwards, restrategize and focus more on growth of local industries.
Little wonder why the Acting President, Prof Yemi Osibanjo, is paying much attention to local industries as a way of rescuing the economy from total collapse. In his words, “Aba made has become a mark of excellence. From the interaction I had with the manufacturers, Nigeria has great ability to do wonderful things, become creators and inventors and Aba exemplify such Nigerian attribute of being inventive”
He went further “These are some of the reasons that informed the decision to bring all the agencies together to a hub center where growth of businesses will be discussed, Aba has what it takes to compete with what can be seen in China”
While it provides a fall back plan in terms of diversification, it will encourage internal movement of money, price reduction, creation of wealth, skill acquisition, employment, innovation, as well as discourage idleness.
Recently, Nigeria military ordered 50,000 locally made boots from Aba. That patriotic move has not gone unnoticed, as the attention of Independent Corrupt Practices and Other Related Offenses Commission (ICPC) has been attracted to the quality of our products. The commission has gone ahead to place order for 5,000 conference leather bags to be delivered within a specified period.
While the target includes generating more revenue for the state, it will encourage economics of scale. This capacity requires larger markets that will expand businesses in Abia State. In the long run, the flow of resources will improve the standard of living of Abians.
On the side of business owners, a cluster will drive the needed competition for rapid flow of business related knowledge among firms, thereby leading to more rapid innovation through market research.
Dr. Ikpeazu’s efforts at electrifying the State will be an added advantage. Recall that it took efforts of the present administration to bring to table management of Geometric Power Limited and EEDC, who have had a long battle over the control of a Power Station in Abia.
Recall also the recent travel Dr. Ikpeazu made with some major players in the private sector to Cairo, which sought amongst other things, to bring about regular power supply so as to boost businesses in the SME hub of Nigeria.
The CEO of Geometrics Power Prof. Bath Nnaji and Mr Pascal Dozie were among those that joined Dr. Ikpeazu to a one day meeting with the President of African Export-Import Bank (Afreximbank)at their headquarters in Cairo, Egypt. The dividends of the meeting is hopefully going to put Abia on the map as one of the first States to enjoy uninterrupted power supply in Nigeria.
Dr. Okey Oramah (President Afreximbank) assured Dr. Ikpeazu that the development of Industrial Parks and constant power supply are in line with the bank’s strategic investment thrust and policy.
Constant electricity will bring about improvement as well as review prices of finished products.
Manufacturers must continue to be innovative so as to remain relevant in the new trend of business development. A healthy competition will result in an enhanced quality of Aba made products in the market.
Increased productivity as a result of exchange of ideas, combined or joint solution to challenges in the business circle will be achieved through cluster.
It is beneficial in the area of corporate financing. Identifying manufacturers, products and the level of distribution, could make it easier for proper financing especially when it is channelled through a specialized trade association. Through cluster, business owners develop market plans which result in expansion of boundaries thereby encouraging economies of scale. The effects of economics of scale result in expansion of markets, capacity building, as well as improvement in internally generated revenue of the state.
Suppliers are easily identified in a cluster. Contracts for production of products will be channeled directly to core producers which will eliminate the activities of meddlesome interlopers in the market.
Issue of multiple tax will be eliminated since tax in this cluster will be streamlined accordingly, as such, will also make it easier for the State to account for the exact amount accruable to the State coffers through taxation.
Having identified some of the gains, we can agree that Dr Ikpeazu’s strategy in this regard aimed at repositioning the State, is a win win approach.
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