The Nnewi Experience

Nnewi Chamber of CommerceThe Nnewi Experience

INDUSTRIALIZATION AND THE NNEWI EXPERIENCE BY ENGR. CHUKWUEMEKA G. NZEWI.

INDUSTRIALIZATION: DEFINITION, ORIGIN AND CHARACTER.

INDUSTRIALIZATION or Industrial development describes the process of transition from an agricultural society, devoid of mechanization, to a society that is based on industry. This involves an increase in technological development. New machines, new forms of power, new transport and new means of mobilizing capital enhance massive increases in productivity.

The origin of industrialization or industrial development is traceable to the industrial revolution in the 18th century. Industrial revolution applies to a set of technical, economic and social changes associated with a rapid development of industry. It was Arnold Toynbee who popularized the phrase “Industrial Revolution” when his book “The Industrial Revolution” appeared in 1884, a year after his death. It was then used to describe basic changes in the British industry during the previous one hundred years. These changes were in the transformation of the coal, iron and textile industries; the mechanization of the cotton and woollen industries and the use of steam power. Britain is therefore regarded as the first country to undergo full-scale industrialization.

Hitherto the changes were slow. Industrial revolution acquired this meaning because in mid- 18th century Britain, these changes took on a new pace and became cumulative. It changed the structure of the economy. The social and economic relations of the people were affected. The political environment became bound up with the new economic momentum.

Generally, Industrial revolution in itself is the shift, at different times in different countries, from a traditionally agricultural based economy to one based on the mechanised production of manufactured goods in large-scale enterprises.  It is the replacement of farming and resource extraction by manufacturing and service activity.  It can also be described as the process in which a society or country (or world) transforms itself from a primarily agricultural society into one based on the manufacturing of goods and services. Individual manual labor is often replaced by mechanized mass production and craftsmen are replaced by assembly lines.

Characteristics of industrialization include the use of technological innovation to solve problems as opposed to superstition or dependency upon conditions outside human control such as the weather, as well as more efficient division of labor and economic growth.Once began, industrial revolutions rarely stop. There may be a decline in the relative importance of early centres of industrial growth and significant shifts in location.

The British experience showed that the following four elements encourage continued industrial momentum. First, an improvement in the transport system. Second, the incentive for firms to lower costs by increasing the scale of operations and maintaining profits in face of competition. Third, constant pressure to discover new techniques, either through detailed research or through the exploitation of new forms of power. Fourth, the impact of governmental policy and foreign developments either by protection or planning (sometimes both). Historical factors also influenced the industrial revolution in Britain. These included domestic peace and security of property that reigned after 1660; absence of legal frontiers within the country including Scotland; zero taxation of profits, robbing business of growth capital and the British naval strength which buttressed foreign trade as much as the navigation laws.

Patterns of industrial revolution in some other countries were as follows: Germany between 1870 and 1913 showed a rapid growth of the coal and steel industries. It also took the lead in the development of synthetic products. Following after the American civil war of 1861-65, the United States witnessed an enormous development of industry. This began with a spectacular expansion in the output of the iron and steel industries and the development of a new 20th century technology based upon light metals, electricity and plastics. It also transformed the consumer goods industries. The case of Europe was slower. It however led to the development of the automobile and of large numbers of non-produced consumer goods. In the Soviet Union, the emphasis was on capital goods. Japan without natural resource was astonishing in its development and very recently the Asian Tigers, China and India.

THE NNEWI EXPERIENCE.
Nnewi is an urban town.  It is also a one town Local Government.  Nnewi has a surface area of about 72 square kilometres and an elevation of 90m above mean sea level.  The climate is tropical having two seasons- the rainy season and the dry season.  The average annual rainfall is about 2 meters while the monthly mean temperature is 28 C 0r 80 F.  These climatological conditions favour agricultural production for such items as oil palm trees, yam, coco-yam, cassava etc.

Nnewi people started with peasant subsistence farming, palm produce trading, and transport business and commercial apprenticeship (mostly in motor trading). Onitsha played an important role for the palm trade up to World War II (1939-45) when road transport to Port Harcourt became more competitive than the river route. During the World War II, it was not easy to import motor parts. This gave the trade in motor parts a boost. Second-hand motors and military vehicles were purchased and vehicles cannibalized. Little wonder then that the founding fathers of commerce and industry in Nnewi started with palm produce and transport businesses. Late D.D. Onyemelukwe who operated from Aba was a produce merchant and a pioneer in transport business. He also invested in landed property and agriculture. He owned a fleet of vehicles and monopolized passenger services between Aba and Onitsha until 1950s. Late Sir L.P. Ojukwu operated from Lagos and was regarded as a business leader of his generation. He was a produce merchant, a transporter and a philanthropist. He became Vice President Lagos Chamber of Commerce. He built up a large fleet of vehicles and lorries in the 1940s. Other well-known transport magnates of the 1930s and 1940s included J.C. Ulasi at Aba and Egwuatu at Nsukka, F.E. Okonkwo at Kano and Benson Okoli at Onitsha.

In the 1950s, a new wave of transport companies appeared. These included Ekene Dili Chukwu Transport owned by Chief A.E. Ilodibe, Izuchukwu Transport owned by Chief Ubajaka and Chidi Ebere owned by Chief Amazu. Chief A.E. Ilodibe  expanded to other activities as motor sales and services, insurance brokerage, communications, steel fabrication etc. In the late 1950s, Nnewi people were said to have sent European motor parts to Japan for copying and importing back to Nigeria. It is believed that Nnewi people controlled about 60 percent of the motor parts trade in the late 1960s prior to the civil war.

The pogrom of 1966 forced the Nnewi people home, as their security was no longer guaranteed outside. Most of their investments outside were lost or declared abandoned properties. The forced homecoming exposed the inadequacy of the Nkwo market then situated at the Nkwo triangle. The need therefore arose to establish a bigger place to contain the influx. The traditional institution of Nnewi headed by the Nnewi Monarch showed its love, concern and commitment to her people. A decision was taken for the relocation of the Nkwo market from Nkwo triangle to the present place, which is bigger. Thus began the march to establish the Nnewi motor spare parts market. At the end of the war, other people came to Nnewi from far and near to trade in spare parts and to live in Nnewi.

When the war ended importation was difficult due to lack of funds. This difficulty in the obtention of foreign exchange boosted the initial domination of old motor spare parts trade over the new parts. In 1970 there were about 700 members of the Nnewi old parts union. By 1978 membership of the new parts union outweighed the old parts union.

Nnewi people had an earlier trade link with Japan in the late 1950s for the importation of motor parts.  In the 1980s, Taiwan took over with their low-priced products as exchange rate movement dislocated businesses.  Taiwan also took over from India and Hong Kong companies who withdrew because of deterioration in trade and credit conditions.  The Taiwan flexible trading practice was more acceptable and Taiwan also became a source of technology acquisition and training.  China and other countries have almost taken over.  This early trade link with the foreign community contributed to the gradual migration from trade to motorcycle assembly and to manufacturing.

One of the earliest attempts at establishing an industry in Nnewi was by Sir. Sam Anazodo in partnership with foreign investors.   In 1966 Chief James Edokwe (Jimex) was to have started a light-aluminum die-casting plant in Onitsha. The war disrupted his plans. He however set up his pit-furnace at Nnewi. He is regarded as the pioneer industrialist in Nnewi. Cento International was established in 1983 to manufacture plastic auto accessories and batteries. This signaled the emergence of new industries in Nnewi. In 1984, the Ibeto photo processing was established. Cutix Plc and Adswitch Plc came up in 1984 to manufacture Electric cables and Electric Switchgear respectively.  Ebunso came up in 1985 for the design and manufacture of process equipment. S and M, a soap, toiletries, disinfectant manufacturer came up in 1986. 1987 saw the following: John White (Fan belts), Uru (Brake cables), Edison (Brake pads, shoes and linings), Armak (Rice & maize processing), Ibeto marble (Synthetic marble). 1988 saw the emergence of Intercontinental feed mills (Animal feeds), Life vegetable oil (Palm kernel processing), OCE filters (Oil filters), Godwin-Kris (Rubber auto parts) and Ibeto (Batteries, accessories, brake pads, linings) and shoes & clutch fibers (1990). Dewaco (industrial moulds) came up in 1989 while Ifebi farms (Poultry etc) came up in 1991.

Other Industries in Nnewi include the INNOSON VEHICLE MANUFACTURING PLANT founded by Chief Innocent Chukwuma.  Recently in December, 2014 the company unveiled its new set of IVM vehicles, which local content was put at 70 percent by experts and professionals.  The IVM brand of vehicles (Fox, Umu, G5 and Carrier 4WD Double cabin Pick Up) have been accepted in the market and they are affordable, available and competitive both in quality and price.  There is the Ngobros and Company Nigeria Limited founded by Mr. Humphrey Ngonadi that produces Babymate Diapers-a marked departure from the auto and motorparts known to Nnewi. There are also the Kotec Group, founded by Chief Chika Emenike that produces Tummy Tummy noodles and Louis Carter Industries Limited that produces all kinds of plastic products and Agro foods. It is instructive to mention here that Louis Carter started building its facility early in 1985, completed in 1991 but commenced production in 1998.

According to Alexander Gerschenkron, the Russian-born economist: ‘‘historical events influence the path of Industrialization’’. The war caused the Nnewi people to think Home. The product of peace and strong community ties and the support of the traditional institution remain factors that helped in the setting up of new industries. Also the loss of properties outside Igboland, especially in Port Harcourt, the need for security and the aftermath of the northern massacres and the civil war may also have triggered the industrial surge. Another reason is the vast experience and skills acquired in trading which made it easy for the Nnewi people to move from trading to manufacturing.

Not all Nnewi industrialists have located their industries in Nnewi. The Coscharis Group is internationally acclaimed and has significant and dominant part of its investments outside Nnewi.  The  Innoson Group has its  plastics factories  in Enugu.  The  Ibeto Group has its Cement Factories  in Nkalagu and Port Harcourt;  Capital Oil and Gas Limited is a leader in the Oil and Gas industry and has its major investments in Lagos. The Chicason Group has investments in Abuja, Benin, Calabar, Lagos,Makurdi and outside Nigeria.

It is not all the early industries in Nnewi that have survived the founders. The reason has been traced partly to the quarrels over properties by their siblings at the death of the founders. There was in most of the cases an absence of a managerial culture and plan for succession and survival. This post founder crisis has limited economic development, as the principle of cumulative legacy is lost to generational extinction of wealth accumulation.

According to the records of the Nnewi Chamber of Commerce, Industry, Mines and Agriculture (NCCIMA) there were 40 registered members in1992. This number rose to 118 by 1995. Twenty years after (2015), the registered membership is still below 200.   Manufacturing accounts for about 18%, service sector 14% and the rest trading.   Not all members of the Nnewi Chamber are manufacturing. The period of 1984-1995 witnessed a high growth in the establishment of industries. A significant number of those industries are still in existence. The survival rate of industries in Nnewi is relatively higher than in other parts. The reason may be because of the resilience of the people, sound economic studies and acquired skill/expertise before the investment. In majority of the cases it is not based on reliance on political access and state patronage.

Between 1996 and 2003 very few industries were established. Though this may be regarded a National problem but for Nnewi the major constraints were poor infrastructure (road, electricity, and water).Others include hostile business climate due to multiplicity of taxes and excessive regulatory practices and high cost of self-provision of basic services. It also included the absence of a pool of skilled and knowledgeable manpower, and a limited access to technical and managerial advisory services.

According to Engr. Dr. Sam Chukwujekwu, “the result of all the above is that the rate of industrial growth has slowed down in Nnewi – while some old industries are struggling to survive, new ones are not coming up fast enough. The reality of the situation however is that for Nnewi to survive, the industrial sector must grow substantially to a point where it is impacting significantly on the commercial sector”. The recourse to commercial importation as a way of survival will greatly hamper industrialization. Some big time industrialists are already involved in the commercial importation of such items as rice and cement because of the low profit yield from the manufacturing sector. This remains an unfortunate development because industrialization is impaired in any economy where commercial importation yields better than manufacturing.

Over 95% of industries in Nnewi are built by indigenes. The absence of a developed Industrial estate may be the single most important factor why the non-indigenes have not contributed noticeably to the industrialization of Nnewi. The Nnewi Chamber had initiated steps for the provision of land for the industrial estate. The estate will help existing small and medium industries and lead to a planned industrial development. It will also ensure that the indigenously driven industrial revolution in Nigeria for which Nnewi has come to be known is sustained. The 76 hectares of land already earmarked by the Government should be developed. Also the N50 million pledged by General I.B.Babaginda (during the special trade exhibition in his honor, at Anaedo hall in 1992) for the development of the estate should be followed-up for release.

The assembly of motorcycles in Nnewi with local brand names remains a good development that positively impacted further industrialization of Nnewi. The early emergence of such motorcycle assembly industries as Innoson and Maryment amongst others was definitely in the right industrialization path.  There are many informal manufacturing activities in the production of motorcycle parts in Nnewi. The gradual approach of conversion from importation to manufacturing and assembly has augured well for the future of industrialization.

There are four distinct modes of investment financing in Nnewi. This excludes the isolated case of partnering with foreign investors already mentioned. The first is where the owner finances the investment 100% with own funds and then with some support from the Banks for Working capital.This is the dominant mode with very few not receiving any support from Banks. There is always the problem of post founder succession and success. The second is where a few people collect money from others to set up factories that did not work. This second mode is replete with a lot of credibility as well as succession problems. The third mode is by going public by raising money from the Stock Exchange. This is the mode adopted by Cutix Plc and Adswitch Plc. According to the founder of Cutix Plc and Adswitch Plc, Eng. G.O.Uzodike, he initially started with private placement but quickly went public as soon as possible. He preferred to go public rather than use private placement for three main reasons. He wanted the shares to be marketable. He believed it would be easier to raise more funds in future and he wanted the two companies to survive him. The fourth mode is from 100% bank financing. This could not be sustained as funds were diverted into other areas. The indiscipline in the management of such funds created problems that caused the failure and closure of both trading and manufacturing businesses.

Technological sources in Nnewi are foreign and the level of technology is still low.  Acquisition of technology has been through copying and self-teaching.  The reasons for the low technological levels are directly related to skill deficiencies and inadequacies of infrastructure.  Presently, technical and technological support systems provided in Nnewi by the Federal Government include such institutions as Technology Business Incubation Center (TBIC) , National Engineering Design and Development Institute (NEDDI) and Nigeria Building and Road Research Institute (NBRRI).

In the past, the United Nations Industrial Development Organization (UNIDO), the World Bank Group (WBG) and the African Project Development Fund (APDF) jointly mounted a program aimed at developing the Nnewi Light Engineering Cluster to a self-sustaining standard. The program was a big boost in the right direction towards the industrialization of Nnewi.  Nnewi remains a significant source of motor spare parts trade in Nigeria (both for automotive and motorcycle). There are medium and large-scale industries. There are also micro and small-scale entrepreneurs, and importers of new spare parts. Some of the associations that coordinate activities in the Nkwo market include the  old & new motor parts dealers associations and old & new motorcycle parts dealers associations.

Nnewi accommodates some of the best hotels east of the Niger.  Recreational and relaxation centres are springing up daily. Nnewi is the home of a Nigerian Premier Football League Team. There is a Nigerian Police area command and two Divisional Offices. There are four magistrate courts, four high courts and a customary court.  There is a Federal prison, Federal Roads Safety Corps and Civil Defence Corp.

Nnewi boasts of a University Teaching Hospital, a College of Health Sciences, numerous specialist hospitals and a good number of General practice hospitals.  There are also very strong branches of such professional bodies as the Nigerian Society of Engineers, the Nigerian Bar Association, the Nigerian Medical Association etc.  There is a proposed Pentecost University.  There are many public and private primary and secondary schools. The activities of the finance, insurance and real estates (referred to as the F.I.R.E. sector) keep growing while ICT services are also available.

Nnewi town is a predominantly Christian town and the Headquarters of both the Diocese of Nnewi (Anglican Communion) and the Catholic Diocese of Nnewi. It has its own fair share of other Church denominations, Pentecostal Churches, Ministries and Fellowships.

The major constraints to sustained rapid industrialization of Nnewi remain inadequate power, inadequate road network, absence of public water supply, multiplicity of taxes, scarce skilled labour, lack of a developed industrial estate and uncoordinated advocacy at all levels of interaction with Governments.

CONCLUSION

In the British experience it was noted that certain elements encouraged Industrial momentum. Most of those elements are either inadequate or non-existent in Nnewi.  The State Government has done some of the intra community roads.  Many more need to be done for easy evacuation of agricultural products through inter community roads that link  markets.  The Federal Government needs to completely maintain the Oba-Okigwe inter-state highway. Power supply is inadequate.  The 132KV transmission line with 60MVA substation requires speedy completion by the Federal Government.  Pipe borne water is unavailable. The burden of multiplicity of taxes and levies is heavy.  The knowledge industry is inadequate. The policies of Government are inconsistent. There is no protection of the industries.

Nnewi has a lot of SMEs.  By nature, SMEs have strong local content and relevance.  They create jobs because their production techniques are labour intensive.  They utilize local resources and skills to meet the needs of the local market.  They have the greater potential to facilitate the development of indigenous entrepreneurship.

SMEs discourage rural-urban drift.

Some of the early Nnewi businessmen started with farming and then moved into palm produce trading.  They were later to diversify into transport business which complimented the palm produce trade.  With the emergence of the motor and motorcycle spare parts trade, farming became relegated to subsistence.  Also as Nnewi progressed from a rural community to an urban town, migration reduced the cultivable land area as the need for housing increased.  The rural youths in a bid to improve their utility values, also opted for and embraced trade apprenticeship in preference to farming. Some Youth Organizations now collect Development levies.

Although Nnewi may be regarded an urban town, the traditional institution still plays critical and crucial roles.  Family ties and kinship networks affect developmental decisions.  This is manifested more in land acquisition and disposal as the need is always to know the parties involved in such negotiations.  Community Development Associations (Unions) also influence issues, just as the umbrella body is expected to  operate by consensus.  Whilst economic activities can operate freely based on established norms and standards, these support systems of relationships and the development of physical infrastructures rely on the communal and traditional systems. Nnewi people may exhibit individualistic tendencies but beneath that lays their collectivism in their responsibilities and obligations to extended families and social groups but not to the Nnewi cause at the national and state levels.

Nnewi is a relatively peaceful town by its cultural composition.  Violence is not in the character of its people.  Unnecessary bloodshed is abhorred.  There may be internal misunderstandings.  There may be misrepresentations and squabbles.  It is all about “native” intelligence and scheming.  It is all about manoeuvrings occasionally sweetened with situational half truths to get the better of the other party.

The industrialization of Nnewi has been encouraged by the need to think home. The relative communal peace and security has also promoted it. The Nkwo market as a functioning and booming market for automotive and motorcycles trading have enhanced it. The utilization of home-grown technology or of adapted technology and the establishment of inter-industry linkages have strengthened industrialization in Nnewi.  The current brouhaha surrounding the Nkwo Nnewi triangle is also part of the process.  The hospitality sector is witnessing growth. ICT and the F.I.R.E. services are on the increase and booming.

The Nnewi Chamber of Commerce should have been one of the most viable in Nigeria. Most of the Chief Executives want to go it all alone. It is only during crisis that they find convergence. This should not be the case. There is a need to unite and be pro-active. The linkages and finance available to the Group far outstrip what a single individual can do or get.

It is true that Nnewi people have tried to provide for themselves those things that enhance industrialization. However the truth of the matter is that we cannot continue like that without massive Government assistance. The absence of a true and real political power base in Nnewi is a great hindrance. At present Nnewi is sacrificing political dynamism and sagacity on the altar of rotation for State House of Assembly.  This effectively confers on Nnewi the neophyte status in State diplomacy.  There are pockets of professional politicians who are more interested in personal gains than in the industrial growth of the town. Such should no longer be in the driving seat.

Genuine industrialists should harmonize their interests and take the driving seat for Nnewi to remain the Japan of Africa. The individual contributions of Nnewi industrialists to the Nigerian economy cannot be glossed over. The exploits of Nnewi industrialists both at Nnewi and in Nigeria remain a source of encouragement, hope, strength and joy. Why will Nnewi not get its fair share of the presence of Government and become the industrial giant it is destined to be?  Ndi Nnewi Ekenem unu!!!

ENGR. CHUKWUEMEKA G. NZEWI (Eziokwubundu Nnewi)

Umudualor Family, Edoji Uruagu Nnewi. 2015-07-30

REFERENCES:

Chambers Encyclopaedia: New Revised Edition Volume VII

The New Universal Library Volume VII

Oyelara-Oyeyinka Banji – ‘’Nnewi-An emergent industrial cluster in Nigeria’’.

Forrest Tom: The Makers and Making of Nigerian Private Enterprise.

Chukwujekwu S.E:  “Developing the Nnewi Industrial Cluster- A strategy for Industrial Firms Survival.”

Chukwuemeka Nzewi:  “History of Industrialisation of Nnewi”.

Chukwuemeka Nzewi:  “An Overview of Nnewi Business Environment”.

John Okonkwo Alutu: “ Nnewi History ( From the Earliest Times to 1980/1982)