The Centre for the Promotion of Private Enterprise (CPPE) has identified structural inefficiencies and policy uncertainty as the missing link in Nigeria's quest for industrialisation over the past 26 years.
Manufacturing Sector Under Democratic Rule
Reviewing Nigeria's manufacturing sector under democratic rule, the Centre described it as a journey of resilience amid structural adversity. In a document signed by its Chief Executive Officer, Dr Muda Yusuf, the CPPE stated that industrialisation cannot flourish in an environment of structural inefficiencies and policy uncertainty. It insisted that Nigeria must move beyond an economy driven largely by consumption and import dependence towards one anchored on production, value addition, and industrial competitiveness.
According to the CPPE, the future of economic prosperity lies not in what Nigeria imports, but in what Nigeria produces. “Manufacturing remains the bridge between natural resource wealth and broad-based prosperity,” it said, adding, “Until that bridge is strengthened, the promise of economic transformation will remain only partially fulfilled. Industrialisation is not merely an economic aspiration; it is the foundation of economic sovereignty, sustainable prosperity, and national competitiveness in the twenty-first century.”
Foreign Ownership and Indigenous Champions
The CPPE also warned against an industrial ecosystem that increasingly relies on foreign ownership without simultaneously nurturing indigenous industrial champions, saying that it risks weakening the foundations of sustainable industrial development.
Structural Obstacles
It said the biggest obstacles confronting Nigerian manufacturers remain structural, including power supply, logistics inefficiency, and high cost of finance.
“Power supply continues to be one of the most binding constraints on industrial productivity. Manufacturers are compelled to self-generate energy at enormous cost, undermining competitiveness and eroding profitability,” it said.
“Logistics inefficiencies constitute another major burden. Decades of underinvestment in rail infrastructure have deprived manufacturers of a cost-effective cargo transportation system. Consequently, excessive dependence on road transport has inflated production and distribution costs, weakened supply chains, and reduced competitiveness.
“Then we also have the prohibitive cost of finance. With lending rates frequently ranging between 25 and 30 per cent, manufacturers face borrowing costs that are among the highest in the world. Such financing conditions are fundamentally 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.”
Recent Economic Reforms
It noted that one notable achievement of recent economic reforms has been the improvement in foreign exchange market liquidity. According to the CPPE, the severe foreign exchange crisis of 2022–2023 inflicted considerable damage on manufacturing, disrupting production, constraining imports of industrial inputs, and forcing some firms to scale down operations.
“The restoration of liquidity in the foreign exchange market has significantly improved manufacturers’ access to foreign exchange and reduced one of the most critical operational constraints facing the sector.
“It is equally commendable that the government’s current fiscal policy framework provides substantial import duty concessions on critical manufacturing inputs, including raw materials, intermediate goods, and industrial machinery, with tariff rates ranging from zero to 10 per cent.”
This policy, it said, represents a significant boost to industrial competitiveness. “By lowering production costs and easing the burden of imported inputs, it enhances manufacturers’ capacity to expand output, improve productivity, deepen value addition, and strengthen their competitiveness in both domestic and export markets. It is a pragmatic fiscal intervention that supports industrialisation, investment growth, and job creation,” it said.
Path to Industrial Growth
For Nigeria’s industrial future to experience growth, the Centre said it requires a deliberate and sustained commitment to competitiveness. According to it, “Power sector reforms must deliver reliable and affordable electricity. Investments in rail infrastructure must be accelerated to reduce logistics costs. Development finance institutions should be strengthened to provide long-term industrial financing at concessionary rates.”
It also suggests that government procurement policies should aggressively prioritise locally manufactured products. Executive orders promoting local content should move beyond rhetoric and become enforceable instruments of industrial policy.
“Security challenges must also be addressed with urgency. Insecurity has disrupted access to raw materials, constrained market expansion, and weakened investment confidence across several manufacturing value chains.
“Equally important is the need to deepen backward integration and resource-based industrialisation. Countries become industrial powers by transforming their natural resource endowments into manufactured products, not by exporting raw materials and importing finished goods.”
