Aba Leather and garment cluster; A huge gain to business owners

Posted by Admin | 8 years ago | 3,251 times

By Ikechukwu Iroha

"A geographical concentration of inter-related industries that are engaged in the manufacturing of similar products" .

For the purpose of this short article, I will take the above definition to explain what a cluster is and what Abians Stand to gain from leather and garment cluster.

Recently, MadeInAba has become a trademark for locally manufactured shoes and bags. According to a report by Sam Hart,
The Aba Leather and Garment Industrial City has taken off in earnest.
The Industrial City is located at Umukalika in Obingwa LGA within the greater Aba Metropolis.

He noted that the Industrial 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 managing the offtake.

Facilities will include latest equipment and machinery for processing finished leather goods, industrial clothing line management and an ambient environment 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 one of the articles I wrote earlier in support of the campaign for made in Aba products, I said that the Governor of Abia State Dr. Ikpeazu has distinguished himself in the quest for self sufficiency. It's a project that has continued to give good record. The Governor's effort at diversifying the state’s economy through his vigorous campaign of bringing the Made in Aba products to the global attention is a commitment that has shown his readiness to leave a foot print in the sand of time.

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 in the economy, it can as well result to scarcity of products. Law of demand made 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 increment.

Any Government that wishes to succeed in this economic recession must look inwards, restrategize and focus on locally made goods. While it provides a fall back plan in terms of diversification, it will also encourage internal movement of money, price reduction, creation of wealth, skill acquisition, employment, innovation, as well as discourages idleness.

Recently, Nigeria military ordered 50,000 locally made boots from Aba. While the target includes generating more revenue for the state, it will encourage economics of scale. These capacity requires larger markets that will expand businesses in Abia State. On 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.

Manufacturers must continue to be innovative so as to remain relevant in the new trend of business development. A healthy competition will result to 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 to expansion of boundaries thereby encouraging economies of scale. The effects of economics of scale result to 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 the 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 that accrue to the State purse through taxation.

Having identified some of the gains, we can agree that Dr Ikpeazu’s strategy in this regard that is aimed at repositioning the State, is a win win approach.

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