Twenty-six years after Nigeria returned to democratic rule, the country’s manufacturing sector remains trapped in low growth, with its contribution to Gross Domestic Product (GDP) largely stagnating at between 9 and 10 per cent.
The Centre for the Promotion of Private Enterprise (CPPE) raised the concern in a statement issued on Thursday by its Chief Executive Officer, Dr Muda Yusuf.
According to the group, the failure of the manufacturing sector to achieve meaningful expansion highlights the absence of a decisive industrial transformation despite years of policy reforms and government interventions.
The CPPE boss stressed that Nigeria’s economy remains heavily dependent on imports and primary commodities because the industrial sector has struggled under the weight of structural challenges, policy inconsistencies and weak infrastructure.
He noted that one of the most visible signs of industrial decline has been the collapse of public refineries, which he described as victims of poor governance, policy failures, weak accountability and entrenched rent-seeking.
According to Yusuf, several manufacturing subsectors have suffered a similar fate over the years, including textiles, tyres, batteries and automobile assembly, leading to the disappearance or contraction of industrial clusters that once supported economic activity and employment.
The CPPE chief said the consequence has been a gradual weakening of Nigeria’s industrial base and growing dependence on imported products that were previously produced locally.
While highlighting the challenges, Yusuf acknowledged that some industries have recorded notable success.
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He identified the cement industry, the food and beverage sector and the Dangote Refinery as examples of industrial achievements that have emerged despite difficult operating conditions.
He argued, however, that these successes were driven largely by private-sector resilience and investment rather than a supportive policy environment.
“Many successful manufacturers have thrived not because conditions were favourable, but despite formidable policy, regulatory and infrastructural obstacles,” Yusuf said.
He identified unreliable electricity supply, poor transport infrastructure and high borrowing costs as the biggest obstacles to industrial competitiveness.
He noted that manufacturers are forced to generate their own power at high cost, while decades of underinvestment in rail transport have increased logistics expenses and weakened supply chains.
He also expressed concern about lending rates of between 25 and 30 per cent, saying such financing conditions are incompatible with long-term industrial investment.
“No manufacturing economy can achieve global competitiveness when power is unreliable, logistics are inefficient, and capital is prohibitively expensive,” Yusuf stated.
The CPPE boss further blamed policy inconsistency for discouraging investment, noting that frequent shifts between protectionist and liberal economic policies have created uncertainty for manufacturers.
He added that smuggling and weak border enforcement have also undermined efforts to protect local industries from unfair competition.
Yusuf raised concerns about the declining presence of indigenous manufacturers and the increasing dominance of foreign-owned firms, particularly from Asia.
While acknowledging the benefits of foreign direct investment, he warned that Nigeria risks weakening its domestic industrial capacity if local enterprises are not adequately supported.
Despite the concerns, he said recent reforms have delivered some positive outcomes, particularly the improvement in foreign exchange liquidity after the severe currency shortages experienced in 2022 and 2023.
He also welcomed government policies that grant import duty concessions on critical manufacturing inputs and machinery, describing them as measures that can improve competitiveness and lower production costs.
The CPPE chairman called for a new industrial strategy focused on reliable electricity supply, improved rail infrastructure, affordable long-term financing, stronger local content policies and enhanced security.
He stressed that Nigeria must shift from an economy driven by consumption and imports to one built on production, value addition and industrial competitiveness.
“The future of economic prosperity lies not in what Nigeria imports, but in what Nigeria produces,” Yusuf said, adding that industrialisation remains the foundation of economic sovereignty, sustainable prosperity and national competitiveness.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X