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Home Commentary Analyst

Nigeria’s Struggle With Industrialisation: A Road Full Of Potholes

by Abdulrauf Aliyu
2 years ago
in Analyst
Reading Time: 3 mins read
Industrialisation
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The persistent discourse surrounding the promotion of “Made in Nigeria” products has lingered on the lips of policymakers, economists, and citizens alike. Despite the rallying cry for change, the progress in embracing and implementing this initiative has been far from satisfactory. The Manufacturers Association of Nigeria (MAN) has been a vocal advocate for a mindset shift, emphasising the need for greater adoption of locally produced goods. However, the reality on the ground suggests that Nigeria’s commitment to industrialisation is wavering.

One of the key instruments touted for driving this change is the implementation of Executive Orders 003 and 005. Executive Order 003 directs all government agencies to give preference to local manufacturers in their procurement processes. Meanwhile, Executive Order 005 mandates the engagement of indigenous professionals in national security projects and encourages in-country capacity in contracts with science, technology, and engineering components. While these orders reflect the government’s acknowledgment of the importance of supporting domestic industries, their effective implementation has been questionable.

The Manufacturers Association of Nigeria (MAN) staunchly believes that manufacturing is the linchpin for economic development, self-reliance, and job creation. However, the road to industrialisation is full of potholes, with challenges ranging from infrastructural deficiencies to policy implementation gaps.

Competing in the global economic race requires a robust business environment, akin to a well-designed road for cyclists. Professor Arturo Bris, an expert in competition and macroeconomics, argues that for a country to ride fast in this race, it needs a good “bike” (businesses), a fit “cyclist” (business leaders), and a smooth and fast “road” (government and external environment). The responsibility of the government, therefore, is to create conducive conditions for businesses to thrive. Unfortunately, the road to industrialisation in Nigeria seems bumpy, hindering the growth of indigenous businesses.

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A glaring example of the contradiction in Nigeria’s commitment to “Made in Nigeria” is the procurement of foreign-manufactured SUVs for the National Assembly. While MAN advocates for local preference in procurement, the National Assembly’s choice to import vehicles undermines the very essence of supporting local industries. If the legislative arm, which plays a vital role in shaping policies, opts for foreign products, it sets a precedent for the executive arm at both the federal and state levels to follow suit. This not only contradicts the spirit of Executive Orders 003 and 005 but also sends a disheartening message to local manufacturers.

Michael Porter’s theory on national competitiveness emphasises the role of a supportive business environment in fostering economic growth. A government’s commitment to providing a conducive environment, as reflected in the effective implementation of policies like Executive Orders 003 and 005, is crucial for the success of local industries. However, the choice of foreign-made vehicles for the National Assembly raises questions about the government’s sincerity in creating a level playing field for indigenous businesses.

Moreover, the consequences of such decisions extend beyond the industrial sector. The procurement of foreign products by government institutions, especially those with significant financial influence like the National Assembly, has implications for the exchange rate of the Nigerian naira. When a considerable portion of government spending goes to foreign goods, it exerts pressure on the demand for foreign currencies, leading to a depreciation of the naira. This, in turn, affects the prices of goods and services in the country, contributing to inflationary pressures.

Victor D. Norman’s insights on how nations compete further illuminate the challenges Nigeria faces in its quest for industrialisation. Norman argues that a nation’s competitiveness is not only about the cost of production but also about the ability to innovate and upgrade. Supporting local industries is not just an economic decision; it is an investment in the nation’s long-term competitiveness. By opting for foreign-made SUVs, the National Assembly risks stifling the growth of the local automotive industry, limiting its ability to innovate and compete on a global scale.

The focus on short-term gains, such as the perceived prestige associated with foreign-made products, overlooks the long-term benefits of nurturing domestic industries. The government’s commitment to creating an environment that supports innovation, job creation, and economic growth must be unwavering. The road to industrialisation requires a consistent and dedicated effort to address the challenges faced by local manufacturers.

In essence, the question lingers: Does Nigeria really want to industrialise? While Executive Orders 003 and 005 suggest a commitment to supporting local industries, the procurement choices of government institutions like the National Assembly raise doubts about the sincerity of this commitment. The road to industrialisation is fraught with challenges, and the government must ensure that it is not contributing to the obstacles hindering the growth of indigenous businesses. A genuine commitment to “Made in Nigeria” goes beyond policy pronouncements; it requires concrete actions that prioritise and support local industries for the long-term prosperity of the nation.

 

Tags: Industrialisation
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