By Peter Osalor
In 2009, the United Nations Industrial Development Organisation (UNIDO) announced plans to conduct investor surveys in 22 African countries. A key goal of the survey in the case of Nigeria is to facilitate the creation of a Nigerian industrial master plan. The programme, which will also evaluate the impact of policy on government efforts to promote rapid SME development. UNIDO officials in Nigeria claimed the survey would be of significant assistance to the private sector as well, helping expand operations and set performance benchmarks.
At the same time, the Manufacturing Association of Nigeria came out with a report identifying 37 companies that had closed down across the country over the space of just two weeks. The report once again confirms the bitter state of affairs of the Nigerian economy, where closures are a frequent and constant refrain. A complete account of contemporary Nigerian industry is in fact impossible without a mention of the de- industrialisation that continues to plague it. This is another core feature of the great ‘Nigeria paradox’ of acute economic backwardness despite abundant natural and human resources.
The collapse of world oil markets in the early 1980s drastically reduced Nigeria’s foreign exchange reserves and practically stalled economic growth. The cummulative effect of years of incoherent policies further upset the country’s fragile international and domestic fiscal conditions, causing massive inflation, unemployment and poverty. Nigeria’s standing as middle – income country was scuttled, and by the 1990s, it was confirmed as one of the poorest in the world, an even more demeaning fall in average living standards accompanied the loss of natural fortunes.
The economic downturn proved especially harsh on the manufacturing sector, partly at least due to the over-dependence on oil exports that thwarted economic diversification. With local sourcing of raw material confined to all but a few industries, capacity utilization plunged dramatically in import – dependent operations. Nigerian manufacturing is predominantly about isolated assembly line functions with very limited or no backward connections to the economy. These and other factors combined to bring the total GDP contribution from manufacturing down from a little over 9% in 1981 to 6% by the end of the last century.
Industrial decline has also, partly at least, been fed by unrealistic dependence on imports, often with shocking results, For instance, Textile imports have shot up to a staggering N4.3 billion annually to keep up with burgeoning demand. Sadly, the number of textile industries in local operation fell from 140 in the 1970s to less than ten presently. More importantly, existing units operate at less than 50% capacity due to equipment and technical shortfalls.
The over- dependence on imported goods, however, is by no means limited to textiles. Nigeria imports everything from machinery to chemicals, transport equipment to manufactured goods and live animals. Many in Nigeria consider it a shame that the government abandoned agriculture in favour of oil in the early 1980s. What is even more shameful is the fact that this formerly agrarian nation is now critically dependent on food imports. Nigeria imported $ 600 million worth of rice in 2008 alone, with local food production amounting to only a fraction of overall demand.
Nigeria’s chronic dependence on imports is a result of many decades of misdirected policies that swamped local industry and wiped out diverse avenues of employment and wealth creation. Infrastructure deficits have been the largest hurdle to industrial expansion.
What Nigeria effectively needs are policies fostering rapid business development across sectors. In other words, an enterprise revolution that accelerates sustainable growth while simultaneously helping to alleviate poverty and improve living standards. It also requires a radical rethink of the country’s import policies, in a manner that focuses on improving productivity and employment through development of locally relevant enterprises. Import curbs can also prove hugely beneficial for Nigeria, provided they are judiciously executed to promote industrial and small- business resurgence in prospective sectors.