The Nigerian Economic Summit Group has urged the federal government to develop industrial policies that will favour private investments in the manufacturing sector of the nation’s economy.
According to its 2021 Macroeconomic Outlook report, the NESG asked the government to carefully create sectorial plans for priority areas as well as address the challenge of insecurity in the country.
The report stressed that the manufacturing sector is one of the six sectors that have the potential to create jobs and reduce poverty.
It added that from recent happenings, actual investments in manufacturing are realised when there is an intersection of market opportunities and government support.
The NESG report maintained that Nigeria’s reliance on imports, its large market and the coming into effect of the African Continental Free Trade Area agreement present a huge opportunity for investment in the manufacturing sector, especially in agro-processing and light manufacturing.
Also, the report noted that Nigeria’s manufacturing sector faced several challenges even before the outbreak of the COVID-19 pandemic.
It posited that before the pandemic, the sector had suffered mainly from the closure of land borders in September 2019, which reduced informal exports and indirectly affected several manufacturing outfits in Aba, Kano and Lagos.
The report: “The growth of the manufacturing sector has been stagnant (average growth of -0.6% from 2015 to 2019) while capacity utilisation has remained low.
“The manufacturing sector is made up of 13 subsectors, including oil refining; cement; food, beverage and tobacco; textile, apparel and footwear; wood and wood products; pulp, paper and paper products; chemical and pharmaceutical products; non-metallic products; plastic and rubber products; electrical and electronics; basic metal, iron and steel; motor vehicles and assembly and other manufacturing.
“The sector is dominated by informal players that are mostly micro, small, and medium enterprises.
“Manufacturing is Nigeria’s third-largest sector in terms of employment, after agriculture and trade, but the poor quality of infrastructure remains the longest standing problem of the sector in Nigeria and contributes to the high cost of production.
“Bad road networks and inadequate electricity supply also make it difficult for businesses to maximise returns and limit operations costs in the sector.
“However, Nigeria has numerous favourable conditions for investment, especially in its manufacturing sector.
“Some of these conditions include large arable land, strategic location in Africa and large market and opportunities presented by the AfCFTA.
“Developing Nigeria’s manufacturing sector is the solution to Nigeria’s foreign exchange problems as the sector has the potential to create jobs and lift millions of Nigerians out of poverty if the government addresses the current challenges.
“Already, there are several initiatives and interventions in the manufacturing sector, ranging from import restrictions to the establishment of 43 export processing zones which are currently at different stages of development, according to the Nigerian Export Processing Zones Authority.”
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