Industrialization involves extensive technological development of the production system of an economy. That is why industrial development said to represents a deliberate and sustained application and combination of suitable technology, management techniques and other resources to move an economy from the traditional low production to a more automated and efficient system of mass production of goods and services.
The view of the evolution of industrial development in Nigerian economy inline with its challenges and prospects further disclosed: the problems of weak demand for local manufactured goods, high cost of production due to inflation, incessant power outages which resulted into high cost of maintaining power generating sets, Globalization and stiff competition from cheap imports, high bank rates and down turn in Nigerian economy among other problems like banks regarding the manufacturing sector as a high risk area for lending.
According to experts, industrialization tends to propel economic growth and quicken the achievement of structural transformation and diversification of economies that is why rapid industrial development has been the main focus of economic development because of its potential benefits.
No industrialisation without manufacturing sub-sector consists of wide range industrial activities which include large to medium and small scale manufacturing enterprises as well as cottage and hand-craft units in the informal sector, using simple technology. Some experts said that the ownership of Nigeria’s manufacturing sub sector is shared between the public and private sectors of the economy. In terms of number, the private sector owned manufacturing units are predominant, while aggregate public sector investments dominate in the capital intensive heavy industries
“They are the cottage and handicrafts enterprises engage largely in the production of wearing apparel, light processing of food stuffs and pottery making. The large scale capital intensive manufacturing enterprise include the publicly owned core industrial projects which produce basic inputs for the down-stream industries. The capital goods industries consisting of machinery and electrical equipment are few.”
Experts are of the opinion that the government and the financial institutions should consider as matter of necessity to support industry and manufacturing sector, so that the productive sector of the economy can take its rightful position in the development of Nigerian economy.
The financial institutions should have confidence in the manufacturing industry; invest more in this sector so that they can have enough availability of funds to invest in modern technologies, and computer-integrated manufacturing system. According to CBN 2005 Annual report, the contribution of the financial sector to GDP is low as analyzed below:
2001 2002 2003 2004 2005
Financial sector 4.15% 5.13% 4.23% 4.08% 3.95%
Manufacturing sector 3.52% 3.70% 5.57% 3.68% 3.68%
The two industries will contribute more if there services are fully integrated into each other. The banks should create specialized medium/long term funds for the industry to solve the problem of asset matching. The productive sector with adequate financing from the financial sector will have access to modern machines for active competition in the global market. The finance sector will enhance their earnings potentials and increase their contribution to the Gross Domestic Product.
If there is easy access to funds in the financial institutions, the manufacturing industry should invest in modern computer integrated manufacturing system that will aid the production of quality products, on line production information for planning and decision making, waste in production will be avoided, full capacity utilization will be achieved, resources employed will be adequately and efficiently utilized Foreign direct investment will be attracted to the economy, and this will promote the nation to the rank of developed industrialized nations.
It was reiterated that the government of the nation has a role to play in the areas of regulations and protectionism. The government should create a Monetary and Fiscal policies that are stable for the growth of the industry. The government should encourage the availability of medium and long term funds in the capital and money markets to complement the financial institutions type of lending. This will encourage development in the industry, and they will easily integrate into global economy for competition, access to markets and benefits of international trade.
Nigerian Industrial Development capability to grant long term finance should be enhanced by raising the capital to a minimum of three trillion naira. In addition, the development bank to take care of the agricultural sector of the economy, so that the Industrial Development bank would cater for the manufacturing sector.
Globalization has connected the whole global village into a single market. Nigeria economy cannot exclude itself from the interconnectivity of markets, foreign exchange and training, human development and technology. Nigeria should strengthen its membership of World Trade Organization (WTO) in order to gain from numerous benefits accrued from globalization. Nigeria should ensure to gain competitive advantage in its products.
Researches show that all agricultural products should be converted into finished products, open markets for the products and ensure constant supply into the global markets. The flow of foreign earnings into the sector will boost its development. The operating environment in Nigeria should be well guided with adequate security over production, and welfare of the workforce. The fact is that Nigeria cannot isolate its systems from WTO, otherwise our economy will be at the receiving end the productive sector is marred with the problems analyzed.
However the sector will be transformed into a developed productive industry if the application of sound fiscal and monetary policies is harmonized to create good operating environment that some cost elements in production will be controlled like inflation, rate of exchange and protection of the local manufacturing industries.
With the signing of Executive Order 007 2019 by President Muhammadu Buhari to allow private companies construct and refurbish roads across the country, the two-year old Nigeria Industrial Policy and Competitiveness Advisory Council (Industrial Council) has chalked another landmark achievement in accelerating infrastructure development for economic growth.
The Executive Order is a Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme that enables the Federal Government of Nigeria leverage private sector funding for the construction or refurbishment of eligible road infrastructure projects.
It focuses on the development of eligible road infrastructure projects in an efficient and effective manner that creates value for money through private sector discipline; and guarantees participants in the scheme timely and full recovery of funds provided for the construction or refurbishment of eligible road infrastructure projects through tax credits.
This Executive Order is one of the initiatives midwifed by the Policy and Regulation Subcommittee of the Industrial Council, which is focused on implementing initiatives to incentivize investment; and reduce smuggling.
It is an initiative which time has come because as industrialists in the Council expressed their willingness to intervene in road rehabilitation and construction in their areas of operation through a transparent process that ensures the cost of construction/rehabilitation can be recouped, the Federal Ministry of Finance had conceived the idea. It promptly proposed the scheme for the Industrial Council to develop.
In response, mr Celestine C Ukpong, an astute economy analyst said that the major problem of the country is not about lack of policy frameworks and implementation but consistency and sustainability on policy implementation to the final completion of the project.
Ukpong further said Nigeria lack continuity at all round in the three levels of government that is local, state and federal. Everybody does what he or she wants, using public funds for a project that have no positive impact on standard of living of people, he added.
He noted that many government office holders operates with considering impact of their doing on the grass root people called common man that supposed to be major, major, major beneficiary of the every projects you think of. No industrialization can takes place in any nation without key in people called common man, he affirmed.
Engr Mansur Ahmed, the President of Manufacturers Association of Nigeria (MAN) while briefing media in Lagos said that the local content development which is covered by the executive order and also the buying of made-in-Nigeria products which is also covered by the executive order that encourages local goods.
“These are all initiatives that will have positive impact on the manufacturing sector. So our expectations and our hope is that these will be sustained and if possible also be taken to the next level”
