By Ayo Oyoze Baje
Quote:
:“Industrialisation is not just about factories, it is about creating a national ecosystem of productivity where skilled labour, reliable infrastructure, access to finance, and supportive policies work together.”— Nigerian Economic Summit Group (NESG)
For any country to enjoy sustainable economic growth the factors that facilitate as well as boost industrial production must be firmly put
in place. These include availability of high quality raw materials, deployment of advanced technology, along with top-notch skilled labour. Others are strong and stable infrastructure under a safe and secure environment. But sadly Nigeria is currently grappling with most of these critical issues.
Yet, these have become more compelling for a country such as
Nigeria with a poverty rate estimated at approximately 63% (representing about 140 million people), youth joblessness and underemployment reach over 50% according to civil society reports, and a Human Development Index (HDI) which stands at 0.548 to 0.560, placing it in the low human development category in the world
In fact, the Manufacturers Association of Nigeria (MAN) has consistently highlighted severe structural and macroeconomic hurdles that cumulatively stifle industrial growth and threaten factory survival in the country.
The first of such complaints of course,
is the severe infrastructure deficit of inadequate and unreliable electricity supply. This forces several factories to rely heavily on expensive alternative energy. This,along with poor operational conditions along major industrial hubs and corridors such as Agbara, Ota, and Sagamu and congested port logistics further worsen operational and transport expenses.
Next in the list of complaints by MAN is that of multiple taxation, combined with excessive regulation: it has been discovered for years that most of the large scale manufacturers in Nigeria have faced persistent harassment from multiple tax collectors and overlapping regulatory agencies. MAN has specially noted that a rash of new tax laws and reform acts have yet to eliminate arbitrary levies, compliance costs, and aggressive revenue-driven enforcement by both the federal and state governments
Further to these are the debilitating issues of
high cost and scarcity of credit facilities. With commercial lending rates rising above 35% as driven by high monetary policy rates, these have priced most manufacturers out of affordable bank loans. That perhaps , explains why MAN has reported sharp contractions, specially in commercial credit allocated to the industrial sector.
And as for Foreign Exchange (FX). volatility the unstable exchange rates and difficulties in sourcing reliable foreign exchange make it expensive and complicated to import essential raw materials, spare parts, and industrial machinery.
Added to all of these are rising tariffs and port charges: The frequent upward adjustments, especially in customs duties, import levies, and port terminal tariffs, most of which are implemented without adequate stakeholder engagement, further erode profit margins and domestic market competitiveness.
As for insecurity, it has adversely affected the production of raw food items in states such as Benue, Plateau, Borno,Yobe,Adamawa and Kwara. It has similarly, devastated mining of minerals across different states of the country. Persistent insurgency, banditry, and general insecurity in parts of the country have compelled a significant percentage of manufacturing plants to shut down operations completely due to broken supply chains. These important issues have contributed to the exodus of some multinational corporations from Nigeria
For instance, over the last 10 years, more than 25 major international and multinational companies have completely exited, ended physical manufacturing. Some have significantly scaled down their direct on-ground operations in Nigeria.While smaller firms and local manufacturing entities add up to hundreds of closures, the departure of prominent blue-chip multinationals has accelerated sharply—particularly between 2023 and 2024. But what were their reasons for the exit?
That is the million,- naira question.
The answers according to them were predicated on foreign exchange scarcity, currency devaluation, high operational costs, and of course ,unreliable power supply. Painfully, these challenges remain with us till this day.
Notable amongst the international companies that left our shores are
GlaxoSmithKline (GSK) Consumer Nigeria:. It ended over 50 years of direct operations in 2023,
Also, Procter & Gamble (P&G) shut down its physical manufacturing operations in late 2023, converting Nigeria into an import-only market.As for Unilever Nigeria it stopped local manufacturing of its main home care and skin-cleansing categories with popular brands such as Omo and Sunlight) in 2023. So, what is the best way forward?
According to experts on the economy, we have to prioritize the building of strong infrastructure
begining with stable electric power supply, that of potable water and good access roads,.As an Energy and Industrialization Commentary rightly stated: “Nigeria will never witness an industrial revolution until she fixes her power sector. Electricity is the fuel that drives factories, startups, agriculture, and modern economies.”
For the federal government’s policy to coordinate industrial, trade, and investment strategies, which targets a 15% reduction in trade costs, and boost export volumes by 30% by 2028.to succeed there should be focus on modernizing ports, upgrading roads, and implementing the National Single Window platform to streamline trade and lower business overhead.
There should also be sustained support for MSMEs by prioritizing micro, small, and medium enterprises—which account for over 80% of jobs—through mandatory procurement policies for local goods and targeted financing access. Initiatives such as expanding domestic steel production capacity toward 10 million metric tonnes annually to support import substitution and reduce foreign exchange pressure are of necessity.
