More than 91 percent of manufacturing firms in Nigeria operate as micro outfits for survival rather than growth, leading to around 73 percent of workers running one-person workshops without job creation potential, according to Wilson Erumebor, PhD, principal economist at the Nigerian Economic Summit Group (NESG) in a Tv interview.
Speaking on the findings of two reports released by the Fate Foundation and Fate Institute, Erumebor explained that the deeper issue of the manufacturing sector of the country lies in the structure of the sector, as it is characterised with plenty micro outfits producing shoes, bags or basic goods for survival rather than growth.
The two reports examines the state of industrial development beyond the informal “hustle” economy, and tracks entrepreneurship trends ahead.
Offering a blunt diagnosis, he said, “The simple answer is that we do not know how to produce competitively and at scale. That kind of manufacturing – ‘subsistence manufacturing’, will not lift people out of poverty or move Nigeria to the next stage of development,” he said.
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The problem in numbers
Manufacturing’s share of Nigeria’s GDP and exports has been shrinking for years.
Once oil is stripped out, non-oil exports account for barely five percent of non-oil GDP. At firm level, the picture is starker. Reviewing company accounts, Erumebor noted that even large manufacturers derive only about three percent of revenue from exports, with most firms focused almost entirely on the domestic market.
“That domestic bias is part of why we have persistent foreign exchange (FX) pressures,” he said. “Manufacturers are often the first to complain about FX shortages because they do not earn enough foreign currency themselves.”
Why plans keep failing
Nigeria has no shortage of industrial blueprints: post-independence development plans, structural adjustment programmes, Vision 2020, the economic recovery and growth plan, medium-term development frameworks and the current Renewed Hope agenda. Yet results remain thin.
According to Erumebor, the recurring flaw is execution. “Nigeria is good at planning, but struggles with delivery,” he said. Where progress has been recorded, such as the backward integration policy in cement or parts of agricultural reform, it coincided with sustained implementation.
More worrying, he added, is that Nigeria’s last comprehensive industrial policy dates back to 2014, over a decade ago. This is at odds with global trends, where even free-market economies are embracing active industrial policy through subsidies, tariffs and strategic protection.
“We are in a technology-driven era, yet we still do not have an up-to-date industrial plan,” he said, noting that a new national policy is reportedly awaiting approval.
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The missing middle
The reports highlight a structural imbalance: a handful of large firms at the top, millions of survivalist micro businesses at the bottom, and a “missing middle” of small and medium manufacturers that normally form the backbone of industrial economies.
“That middle is the connective tissue of industrialisation,” he argued, pointing to China and South Korea, where mid-sized firms supply inputs to large manufacturers while pulling smaller enterprises up the value chain.
Industrial policy, he stressed, cannot remain a federal abstraction. States and local governments must develop local industrial agendas that support firms with skills, technology, export readiness and finance.
“In other countries, municipal officials go factory to factory asking what firms need,” he said. “That feedback shapes policy. We have largely missed that micro-level engagement.”
Power, cost and competitiveness
Electricity remains a binding constraint. While its ranking among business challenges has slipped, largely due to modest supply improvements, cost has become the central issue. Grid electricity, Erumebor observed, is increasingly treated as a backup option, with firms turning to renewables to manage long-term costs.
This strengthens the case for decentralised power markets, allowing states to play a more active role in energy provision for industry.
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Access to finance remains the most acute constraint. Only 15 percent of Bank of Industry loans reach small businesses, while just 1.2 percent of total private sector credit flows to them.
“Announcing large funds is not enough,” Erumebor warned. “We need transparent financing tied to performance, exports, productivity and job creation. You cannot industrialise with interest rates at 30 percent.”
What remains, therefore, is to see whether the long-awaited national industrial policy will be executed with discipline, effectively devolved to the states, and firmly anchored on firms capable of moving Nigeria from survivalist production to competitive manufacturing.
Without such industrialisation, Nigeria’s ambition of becoming a $1 trillion economy by 2030 will remain largely aspirational rather than attainable.
If reforms take hold, the clear beneficiaries will be small and mid-sized manufacturers with the capacity to scale, export and create jobs. Conversely, those that stand to lose are the rent-seeking structures that have long thrived on policy inertia and weak implementation.
