Nigeria is presently confronted with significant economic obstacles that jeopardize its trajectory towards sustainable development. The nation’s decades of over-reliance on the oil sector has stunted the growth of other industries, especially manufacturing, which is essential for generating foreign exchange, domestic developments and job opportunities. Recent data shows a concerning fall in the Manufacturing sector, raising concerns about the nation’s ability to develop a resilient and diversified Economy in spite of efforts to move towards one.
Earlier in March, the Manufacturers Association of Nigeria (MAN) disclosed that 335 additional businesses had experienced serious distress in 2023 alone, and that about 767 businesses had closed. A number of economic issues, such as unstable currency rates, high inflation, a unconducive Investment environment, and growing operating expenses, are to blame for this drop. Consequently, there has been a notable surge in unsold products in the industry, totalling ₦350 billion, which is indicative of an abrupt decrease in consumer spending power and real growth, which has dropped to just 2.4 percent.
10 million SMEs closed down operations in 2023.
Small, and Medium-Sized Enterprises (SMEs) sector—often seen as the backbone of the economy—is also badly impacted by the crisis. A startling 10 million of Nigeria’s 40 million MSMEs closed down operations in 2023 as a result of financial difficulties, representing a 25 percent decline. This is a clear sign of the challenging economic realities the country is facing. President of the Association of Small Business Owners of Nigeria (ASBON), Femi Egbesola, emphasised that this decrease is a result of both business closures and growth stagnation in the country.
This stagnation fuels social ills like increasing criminal behaviour and brain drain, hinders innovation, prolongs impoverishment, and increases unemployment. Considering Nigeria’s industrial past, the downturn in the manufacturing sector is especially devastating. The nation historically boasted a number of thriving sectors, including the paper mills, vehicle assembly, and detergent manufacturing, as well as the Textile factories in the northern region. However, the weight of numerous taxes, fluctuating government policies, erratic electricity, and high Inflation have all contributed to the major collapse of these industries.
Tinubu’s administration have implemented economic interventions.
Notwithstanding, the industry appears to be rebounding from the slowdowns of prior years, as seen by its 3.1% growth in 2023, as reported by the National Bureau of Statistics (NBS). In the same year, manufacturing generated approximately $1.5 billion in foreign direct investment (FDI), a sign of continued interest from global investors. An estimated 7 trillion is produced in this industry, largely from the food and beverage, cement, and oil and gas sectors. Approximately 50–55% of manufacturing capacity is now being utilised, which indicates the need for improved Infrastructure and greater efficiency.
With President Bola Tinubu’s administration concentrating entirely on economic reforms and development, there are some beacons of hope for a revived manufacturing industry. The administration has launched a number of social and economic intervention initiatives in an effort to strengthen enterprises and promote economic expansion. These comprise the Digital and Creative Enterprises (IDICE) initiative, the ₦200 billion Presidential Intervention Fund, and the Skill-up Artisans initiative (SUPA). In addition, the government has injected $2.25 billion into the economy to promote wide range development, invest in Agriculture and infrastructure. A group consisting of thirty-one members has been formed to coordinate economic policies to further promote economic growth.
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Yet, experts contended that more vigorous intervention is necessary, especially in the manufacturing sector. Nigeria’s industrial sector has to be revived for social as well as economic reasons. Bold and immediate action is required now, in Nigeria, to halt the manufacturing sector’s downward trend and utilise the nation’s abundant resources to create a strong, diversified economy. While the road ahead could be arduous, Nigeria can triumph over its present challenges and open the door to a more affluent future with strategic planning and unwavering dedication.