Nigeria’s Industrialisation Faces Risks Amid Weak Manufacturing and Agriculture Output

Nigeria’s drive toward industrialisation is facing significant headwinds as the country’s manufacturing and agricultural sectors continue to struggle under the weight of macroeconomic challenges, threatening growth, job creation, and long-term economic stability. Analysts and industry stakeholders warn that without urgent reforms, Nigeria’s industrial ambitions could stall, deepening poverty levels and widening the unemployment gap.

Recent data from the National Bureau of Statistics (NBS) highlight that the manufacturing sector’s contribution to the nation’s Gross Domestic Product (GDP) has been on a downward trajectory. High energy costs, forex scarcity, and rising input prices have forced many manufacturers to operate below optimal capacity. Some have shut down operations altogether, while others have relocated to neighboring countries with more favorable business environments.

The agricultural sector, which employs a significant proportion of Nigeria’s workforce and serves as a vital source of raw materials for local industries, is also facing severe challenges. Erratic weather patterns, insecurity in farming regions, inadequate mechanization, and poor access to financing have all contributed to declining productivity. These problems have disrupted food supply chains, increased import dependency, and put additional pressure on the country’s foreign reserves.

Industry experts argue that Nigeria’s failure to industrialize effectively stems from structural issues that have persisted for decades. According to them, a lack of investment in infrastructure such as power, transportation, and storage facilities has made production costs uncompetitive. Poor policy implementation and frequent policy reversals have further discouraged long-term private investment.

Dr. Muda Yusuf, an economist and former director-general of the Lagos Chamber of Commerce and Industry (LCCI), recently noted that the current economic environment is stifling domestic production. He emphasized that inflationary pressures and high borrowing costs have eroded manufacturers’ profit margins, making it difficult for industries to expand or invest in innovation. “The government must tackle power supply challenges, stabilize the exchange rate, and create a business-friendly environment to boost industrial growth,” Yusuf stressed.

Similarly, the Manufacturers Association of Nigeria (MAN) has repeatedly called for urgent government intervention to address the crisis. In its latest report, MAN noted that over 300 firms shut down in 2024 due to prohibitive energy costs and foreign exchange instability. It warned that if the situation persists, more companies could fold, resulting in job losses and further economic decline.

The agricultural sector faces its own peculiar problems, with insecurity being a primary concern. Persistent attacks on farmers in states like Benue, Plateau, and Kaduna have significantly reduced farming activities and disrupted supply chains. Additionally, inadequate government support for mechanization and modern farming techniques has kept productivity levels low. Many farmers still rely on crude methods of cultivation, limiting output and profitability.

Analysts warn that without robust linkages between agriculture and manufacturing, Nigeria will struggle to build the kind of industrial base required for sustainable economic growth. Industrialisation depends heavily on agricultural output for raw materials and on manufacturing for value addition. A breakdown in either sector undermines the entire value chain.

The Central Bank of Nigeria (CBN) and the federal government have introduced various intervention funds and policies to stimulate the two sectors, including the Anchor Borrowers Programme and sector-specific loans for manufacturers. However, poor implementation, corruption, and limited access have prevented these initiatives from achieving the desired results.

The government’s recently announced industrial policy aims to diversify the economy away from oil dependence by promoting value-added manufacturing and agribusiness. But experts argue that without addressing foundational issues like power supply, logistics infrastructure, and security, these policies may not yield tangible results.

Economists have also urged the government to adopt export-driven industrialisation by leveraging the African Continental Free Trade Area (AfCFTA) agreement. By boosting production and competitiveness, Nigeria could tap into regional and global markets to diversify its revenue base. However, this requires heavy investment in infrastructure, skill development, and policy consistency.

In the face of these challenges, stakeholders emphasize the need for strong public-private partnerships to revitalize both the manufacturing and agricultural sectors. They call for fiscal incentives, reduced regulatory bottlenecks, and stable monetary policies to attract investment and foster innovation.

If left unaddressed, the combined weakness in manufacturing and agriculture could derail Nigeria’s industrialisation agenda, limit job opportunities, and perpetuate dependence on imports. As global competition intensifies, Nigeria’s ability to industrialize successfully hinges on its capacity to resolve these structural challenges and build a resilient production base.

 

Ultimately, for Nigeria to achieve its ambition of becoming a leading industrial hub in Africa, policymakers must prioritize reforms that boost local production, enhance agricultural value chains, and reduce business costs. The fate of the nation’s industrial future depends on swift and sustained actions to tackle these deep-rooted issues before they escalate further.