Increased private sector participation, government policies crucial to develop manufacturing
In pushing for a well-developed manufacturing sector, the private sector plays a key role through investment inflow, a continuous cycle of activities, higher capacity utilization, etc. hence its significance.
However, to achieve the peak of development, Nigeria’s manufacturing sector will require increased participation from the private sector and the provision of an enabling and business-friendly environment from the government.
This was noted in the Nigerian Economic Summit Group (NESG)’s report on Sectoral Reforms and Investments in Nigeria: A focus on the Manufacturing Sector.
“Private investments are important in improving the manufacturing sector’s productivity and repositioning the sector to drive inclusive economic growth in Nigeria,” it states.
According to the report, Nigeria’s manufacturing sector is crucial to economic development because its 13 sub-sectors have the potential to create jobs and reduce poverty taking a cue from other developed countries.
Data from the National Bureau of Statistics (NBS) affirms this as it showed that the sector is Nigeria’s third-largest in providing employment, having employed at least 5.4 million people in 2017.
However, the sector is constrained by various challenges ranging from unfriendly business policies to high production cost, epileptic power supply, dismal infrastructure among other issues all of which have caused stunted growth and low capacity utilization for sector players.
“The cost of not implementing crucial reforms to reposition the sector for competitiveness is evident in the weak state of the sector and Nigeria’s high unemployment and poverty rates,” the report states.
Highlighting major challenges in the sector, the report notes poor infrastructure over-regulation & policy inconsistency, tough business environment, Foreign exchange challenges, inaccessible ports, poor credit availability, among other issues all of which are responsible for the sector’s woes.
The report also adds that Nigeria’s manufacturing sector has numerous favourable conditions for investment inflow including a large market, strategic location, and abundance of natural resources; however, investment inflow is limited due to the various challenges.
It adds that the structure of the country’s manufacturing sector reflects weak diversification and the existence of untapped areas in manufacturing, thus, signifying numerous investment opportunities, however, the investments can only be realized when there is an intersection of market opportunities and government support.
“For the manufacturing sector in Nigeria, the existence of opportunities is not enough to attract significant investment into the sector.
The country’s current situation requires urgent intervention by the government to develop the industrial sector in Nigeria, It becomes imperative that there is synergy and consolidation of efforts from all government ministries, departments, and agencies involved in developing the sector,” it recommends.
The report also adds that for the opportunities to fully materialize, crucial actions are required by the government which includes developing industrial policy and sectoral plans for identified priority areas, ensuring commitment to the implementation of existing plans, addressing the challenge of insecurity, and providing targeted infrastructure