Democracy day: CPPE laments stagnacy of manufacturing sector

…calls for urgent reforms in power distribution, single-digit financing

By Precious Mark

Nigeria’s manufacturing sector has remained largely stagnant, consistently contributing between 9% and 10% to the nation’s Gross Dependent Product (GDP) over the past 26 years despite multiple rounds of policy reforms and industrialization initiatives.

This assessment was contained in a comprehensive economic report released on Thursday by the Centre for the Promotion of Private Enterprise (CPPE).

The report, titled “Manufacturing Under Democracy: A Story of Resilience Amid Structural Adversity,” was signed by the Executive Director of the CPPE, Dr. Muda Yusuf, and provides a critical review of Nigeria’s industrial performance since the country’s return to democratic rule in 1999.

According to the findings, the sector’s weak growth trajectory reflects a profound lack of meaningful industrial transformation, despite decades of high-level policy pronouncements by successive administrations.

“The sector’s contribution to GDP has hovered around 9 to 10 percent for most of the period, underscoring the absence of a decisive industrial transformation despite successive policy pronouncements,” the report stated.

The CPPE noted that Nigeria’s core industrial base has steadily weakened over the last two and a half decades, with several foundational sectors collapsing under severe economic pressure.
The think tank listed the textile industry, tire manufacturing, battery production, and automobile assembly plants as some of the major casualties of this systemic industrial decline.

“Textile mills that once employed hundreds of thousands of Nigerians have largely disappeared. The tire industry collapsed. Battery manufacturing faded. Automobile assembly plants lost momentum,” the report noted.

The document also described the operational collapse of Nigeria’s state-owned public refineries as a major setback for the local economy, characterizing them as prominent symbols of policy failure and weak institutional governance.

Despite the widespread downturn, the CPPE identified pockets of remarkable resilience within the private sector.

It specifically pointed to the cement industry and segments of the food and beverage sector as sub-verticals that have managed to record sustained growth against the odds.

It also highlighted the emergence of the Dangote Refinery as one of the most significant industrial developments in recent history, describing it as a monumental, private sector-led intervention in domestic refining capacity.

The report emphasized that many surviving manufacturing companies have remained in business largely due to raw private sector resilience, rather than supportive policy conditions. It identified major structural bottlenecks continuously choking the sector, including an unreliable grid electricity supply, high logistics costs driven by weak rail infrastructure, and prohibitively expensive commercial credit.

The CPPE pointed out that interest rates for local manufacturers currently range between 25% and 30%, a threshold that makes long-term industrial capital investment practically unfeasible.

“Manufacturers are compelled to self-generate power at enormous cost,” the report observed, adding that high borrowing costs remain a structural barrier to business expansion.

The document also criticized persistent policy inconsistencies and the weak enforcement of trade regulations, which have routinely exposed domestic industries to unfair competition from cheap foreign imports and smuggled goods.

The CPPE raised further concerns over the increasing dominance of foreign-owned manufacturing firms, particularly from Asia, warning that it could systematically erode domestic industrial capacity if not balanced with stronger local participation and equity.

On recent macroeconomic adjustments, the CPPE acknowledged measurable improvements in foreign exchange liquidity, noting that the acute currency crises of 2022 and 2023 had severely disrupted factory production and constrained the importation of essential raw materials.

The group also commended the federal government’s import duty concessions on raw materials, machinery, and intermediate goods with tariff rates pegged between 0% and 10% describing the policy as a practical boost to local factory competitiveness.

To reverse the industrial decline, the CPPE called for urgent, synchronized reforms in power distribution, rail logistics infrastructure, access to long-term single-digit financing, strict local content enforcement, and national security improvements.

The report concluded that Nigeria’s economic future depends on a decisive shift from import dependence to production-led growth, stressing that manufacturing remains the primary catalyst for mass job creation, economic sovereignty, and long-term national prosperity.