Call for New Industrial Policy as Manufacturing Exports Languish at 1.4%
The Manufacturing Association of Nigeria (MAN) and other key stakeholders are calling for a comprehensive new industrial policy, as manufactured goods constituted a mere 1.4 per cent of Nigeria’s total exports in the first quarter of 2024.
In its CEO Confidence Index report, MAN highlighted that the government’s efforts to revitalise the manufacturing sector have fallen short of creating a mutually beneficial outcome. “Government initiatives aimed at revitalising the manufacturing sector… have not resulted in a win-win situation,” the report stated.
Echoing this sentiment, Professor Olusegun Ajibola, an economist at Babcock University, emphasised the need for a fresh industrial policy to address the sector’s challenges. In an interview, Ajibola criticised the overreliance on imported goods and the prohibitive costs of domestic production as major hurdles.
“There were policies from past governments to empower Nigeria’s manufacturing, but they have not yielded the desired outcomes. It is the efficacy that is a problem. There is a need for a total overhaul if the manufacturing sector is to come alive,” said Ajibola, who is also a former president of the Chartered Institute of Bankers of Nigeria. He argued that successive governments, focused on petrodollars, have neglected the real sector.
Recent data from the Nigerian Bureau of Statistics (NBS) paints a stark picture of the current situation. In the first quarter of 2024, Nigeria exported N268bn worth of manufactured goods, significantly trailing behind crude oil exports (N15.4tn), other oil products (N1.9tn), and agricultural goods (N1tn). Despite a notable 51 per cent rise in total exports to N19.17tn from N12.69tn in Q4 2023, and a staggering 195.47 per cent increase from N6.49tn in Q1 2023, the trade balance remains unfavourable for manufactured goods.
The NBS report further revealed that Nigeria achieved a trade balance of N6.52tn in Q1 2024, with total merchandise trade reaching N31.8tn. This represents a 46.27 per cent increase compared to Q4 2023 and a 145.58 per cent rise compared to Q1 2023. However, imports also saw a significant rise, increasing by 39.65 per cent to N12.64tn from N9.05tn in the previous quarter.
David Adonri, Vice President of Highcap Securities Limited, proposed revisiting the 4th National Development Plan initiated by former Head of State Yakubu Gowon as a viable path to developing Nigeria’s domestic manufacturing industry. “Nigeria lacks the heavy industrial base to sustain the productive momentum of light industries, making locally manufactured goods uncompetitive,” Adonri lamented. He criticised the truncation of the Gowon-initiated plan by subsequent administrations, stressing the need for a solid engineering infrastructure to harness domestic resources for self-sufficiency and export capabilities.
In a glimmer of hope, President Bola Tinubu recently reiterated his commitment to supporting Nigerian manufacturers. During the inauguration of a tomato-processing plant in Gafara, Kebbi State, Tinubu reaffirmed his campaign promise to “export more and import less, strengthening both the Naira and our way of life.”
The urgency for a new industrial policy is underscored by the country’s trade balance of manufactured goods, which hit a deficit of N9.4tn in the first nine months of 2023, according to The PUNCH. As stakeholders call for a strategic overhaul, the future of Nigeria’s manufacturing sector hangs in the balance, with potential for significant reform on the horizon.
