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By Merit Ibe
Nigeria’s manufacturing sector remains trapped in a low-growth cycle despite 26 years of democratic governance, according to the Director of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf.
In a policy brief titled Manufacturing under Democracy: A Story of Resilience Amid Structural Adversity, Yusuf noted that the sector’s contribution to GDP has largely stagnated at between 9 and 10 per cent, reflecting the absence of meaningful industrial transformation despite numerous policy reforms and initiatives.
He stressed that industrialisation is critical to economic transformation, job creation, value addition, export competitiveness and resilience against external shocks. However, Nigeria’s economy remains heavily dependent on imports and primary commodities. According to Yusuf, the country must shift from a consumption-driven economy to one anchored on production, manufacturing and industrial competitiveness if it hopes to achieve sustainable prosperity and economic sovereignty.
The CPPE highlighted the steady erosion of Nigeria’s industrial capacity over the years, citing the collapse of public refineries, the decline of textile manufacturing, the disappearance of tyre and battery production, and the weakening of automobile assembly operations. These setbacks, Yusuf said, have deepened the country’s dependence on imported goods and weakened its industrial base.
Despite the challenges, some industries have recorded notable success. The cement sector, food and beverage industry, and the emergence of the Dangote Refinery were identified as bright spots that demonstrate the potential of large-scale industrial investments. Yusuf argued that these successes were largely driven by private-sector resilience and entrepreneurship rather than a supportive policy environment.
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He identified unreliable electricity supply, poor logistics infrastructure and high financing costs as the most significant barriers to manufacturing competitiveness.
Manufacturers continue to rely heavily on self-generated power, while inadequate rail infrastructure has increased transportation costs. At the same time, lending rates of between 25 and 30 per cent have made long-term industrial investment difficult.
The CPPE also expressed concern over policy inconsistency, noting that frequent shifts between protectionist and liberal economic policies have created uncertainty for investors. Smuggling and intense competition from imports produced in countries with lower costs and stronger industrial support have further weakened local manufacturers. Yusuf warned that the growing dominance of foreign-owned manufacturing firms, particularly from Asia, raises concerns about indigenous industrial capacity and economic sovereignty.
However, he acknowledged improvements in foreign exchange market liquidity and government concessions on import duties for critical manufacturing inputs as positive developments. These measures, he said, have eased access to foreign exchange, reduced production costs and enhanced the competitiveness of local manufacturers.
To unlock the sector’s potential, Yusuf called for a new industrial compact focused on reliable power supply, expanded rail infrastructure, affordable long-term financing, stronger local content policies and improved security. He also urged the government to promote backward integration and resource-based industrialisation to transform Nigeria’s abundant natural resources into value-added manufactured products.
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