Nigeria - Manufacturing

More about the Economy of Nigeria.

Manufacturing

While agriculture's relative share of GDP was falling, manufacturing's contribution rose from 4.4 percent in FY 1959 to 9.4 percent in 1970, before falling during the oil boom to 7.0 percent in 1973, increasing to 11.4 percent in 1981, and declining to 10.0 percent in 1988. Whereas manufacturing increased rapidly during the 1970s, tariff manipulations encouraged the expansion of assembly activities dependent on imported inputs; these activities contributed little to indigenous value added or to employment, and reduced subsequent industrial growth. The manufacturing sector produced a range of goods that included milled grain, vegetable oil, meat products, dairy products, sugar refined, soft drinks, beer, cigarettes, textiles, footwear, wood, paper products, soap, paint, pharmaceutical goods, ceramics, chemical products, tires, tubes, plastics, cement, glass, bricks, tiles, metal goods, agricultural machinery, household electrical appliances, radios, motor vehicles, and jewelry.

From 1982 to 1986, Nigeria's value added in manufacturing fell 25 percent, partly as a result of inefficient resource allocation caused by distorted prices (especially for exports and import substitutes) and prohibitive import restrictions. Between 1986 and 1988, World Bank structural adjustment program (SAP) measures contributed to larger increases in manufacturing's contribution to GDP, which grew 8 percent in 1988. These measures included liberalized regulations governing the import of capital, raw materials, and components; the creation of importsubstitution industries; and, beginning in 1988, privatization. The SAP increased production efficiency, cut into the black market, and reduced factory closures resulting from import bans on essential inputs.

The Nigerian Enterprises Promotion decrees of 1972, 1977, and 1981, by limiting foreign ownership shares in various industries, shifted the manufacturing sector from foreign majority ownership in the 1960s to indigenous majority ownership in the mid-1970s and late 1970s. Businesspeople participated in economic policymaking, influencing the government's implementation of indigenization. "Nigerianization," in which foreigners were obligated to sell ownership shares to Nigerians, became an instrument by which a few civil servants, military leaders, businesspeople, and professionals amassed considerable wealth. In 1985 the government selectively relaxed the indigenization decrees to encourage foreign investment in neglected areas, such as large-scale agrobusiness and manufacturing that used local resources. After March 1988, foreign investors were allowed to increase their holdings in a number of other sectors.

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