Industrial development involves extensive technology-based development of the productive system of the economy. It is a deliberate and sustained application and combination of suitable technology, management techniques and other resources to move the economy from the traditional low level of production to a more automated and efficient system of mass production of goods and services. Through industrialisation, developing nations free themselves from the chain of backwardness, achieve higher economic growth and launch themselves into a higher pedestal of development.
For Nigeria, which is currently experiencing economic crisis, industrialisation remains a must if it hopes to launch itself back on the path of national greatness. It is the key that will free the country from further retrogression. But it is a challenge that has dogged the nation since independence in 1960. Since then Nigeria has purportedly pursued industrialisation with the hope of transforming the economy from a monolithic, inefficient and import-dependent economy to a more dynamic and export-oriented economy, especially exports of industrial goods. These aspirations as contained in the successive development plans, especially first and second development plans of the Federal Government, were further reinforced by the windfall gains from crude oil boom of the 1972/73 and 1979/80 periods. However, despite series of deregulation policies introduced since 1986 by successive governments to facilitate industrialisation process in an economically conducive manufacturing environment, the performance of the industrial sector remains abysmal.
In the current trend of globalisation of trade and investment, Nigeria is facing a crucial turning point of how to improve significantly the performance of industry in terms of production and trade.
According to the latest data released by the Manufacturers Association of Nigeria (MAN), manufacturing capacity utilisation in the first half of 2015 dropped year-on-year from 51.95 percent to 50.69 percent in the first half of 2015, but fell by 3.51 percent when compared with 54.2 percent obtained in the second half of 2014. Most economies competing with Nigeria, like South Africa, have over 75 percent capacity utilisation.
Output rose to N384.09 billion in the first half of 2015 as against N270.86 billion seen in the corresponding period of 2014. However, this 42 percent year-on-year appreciation in output was overshadowed by 36 percent drop when compared with N599.92 billion obtained in the second half of 2014.
MAN’s data also show that there were five power outages in industrial zones between January and June, 2015. Up till now, the majority of raw materials are sourced from other countries, a situation that tells a big story about Nigeria’s reluctance to develop and harness its God-given talents. This also informs why many manufacturers are crying wolf over the Central Bank’s decision to ban importers of some items from the foreign exchange market. The logic is simple: If successive governments have done enough to attract investors and raise the quality and quantity of local raw materials, many manufacturers will not be looking outside.
Thus, the challenge to the country is how to design strategies and policies relevant to regional and global competition given the small market of the economy, especially in the area of industrial products.
Nigeria’s industrial policy should be innovation-driven to foster skills upgrade, enhance industrial growth and produce world-class exports. The government should provide the necessary protection and incentives to support and advance the visible efforts of local investors. Nigeria as a nation is currently too far from doing the right things to get its industrialisation dream realised.
It should be noted that heavy reliance of the Nigerian manufacturing firms on imported machinery and equipment is a reflection of the weak industrial base of the country. This situation also reflects that insignificant backward and forward linkages exist among industries in the Nigerian manufacturing sector. Thus, because of the implication of heavy dependence on import of production machinery for foreign exchange demand, there is need to quickly revitalise the industrial base of the economy and promote backward and forward linkages among all categories of industries in the Nigerian manufacturing sector.
A country’s steel sector is at the heart of its industrial revolution. As a matter of urgency, the Federal Government should focus on reversing the trend for the survival and resuscitation of the steel industry which is currently facing serious challenges, with measures such as creating of a local content policy of using made-in-Nigeria iron rods in all small and big government projects and prevention of dumping of steel products in the country. Efforts should be made to resolve the court cases surrounding Ajaokuta Steel Complex, Ajaokuta, and Aluminium Smelter Company, Akwa Ibom State. Government should create special power tariff for the steel industry and also make available an intervention fund at lower interest costs to prevent the immediate collapse of private steel industry
