1. Introduction
The growth of the manufacturing sector has been weak and sluggish since its recovery from the Covid-19 Pandemic with an average annual growth of 3.4% in 2021 and 2.5% in 2022, culminating in the sector’s contribution to Nigeria’s GDP falling far short of globally competitive levels, averaging 10% in its annual contribution to GDP in almost 2 decades. With escalating global and domestic challenges, the growth of the Nigerian manufacturing sector has been hampered, resulting in its underperformance when compared to other countries which has made it evidently necessary to reassess growth strategies within the sector, and resolve critical concerns.
This publication highlights the importance of Nigeria’s manufacturing sector, present an overview of the global and domestic macroeconomic environments, and how they contribute to the manufacturing sector’s key difficulties. We also present our recommended roadmap for industrial growth before concluding with a primary focus on engines for industrialization and sustainable growth in Nigeria, with an emphasis on specific issues to be taken into consideration.
2. Importance of Manufacturing
Manufacturing is a key driver that propels progress in a nation’s economy. It’s a powerful force that revolves on the growth, productivity, and competitiveness trajectories. A nation’s overall economic growth can greatly depend on robustness and performance of the manufacturing sector. We examine the various aspects of manufacturing’s critical importance and why it is essential to the development of a more prosperous economy. Some of the areas that reflects this importance include:
Employment Opportunities
The manufacturing sector is a high labour-absorbing sector that can create direct employments for people like operators of machineries, technicians and engineers in the manufacturing sector. The sector can also create indirect employment for supply chain actors in other sectors of the economy such as raw materials suppliers, logistics and transportation, farmers, miners etc. According to the World Bank, industry employment accounted for 13% of total employment in Nigeria in 2021, necessary development and investments in the sector can increase the ratio.
Government Revenue Generation
Manufacturing helps to expand the tax base (number of taxable people and entities) and tax returns as taxes are paid by both manufacturers and workers ultimately increasing the nation’s revenue. The manufacturing sector currently accounts for about 30% of Nigeria’s Non-Import VAT and 26% of its Company Income Tax. Given its potentials to empower skills development, facilitate increased export & global competitiveness and enhance infrastructural development, manufacturing can influence the revenue generation across other sectors.
