Realising Goals of Nigeria Industrial Policy

Seven months into the implementation of the 2025 Nigeria Industrial Policy (NIP), Dike Onwuamaeze writes that stakeholders in the Nigerian industrial sector are identifying ways to realise its objectives

The Nigeria Industrial Policy (NIP) has been affirmed by stakeholders in the Nigerian industrial sector as the long awaited document that will engender a focused and coordinated industrial development for the country. The Manufacturers Association of Nigeria (MAN) hailed it as a strategically designed document to boost industrial productivity, enhance global competitiveness of Nigerian manufacturers and drive massive job creation through dedicated financing frameworks, including proposed development funds and cluster financing.

However, the manufacturers association stated that the success of the NIP would depend on actionable and measurable steps that would address the binding constraints hindering the competitiveness on the country’s industrial sector.

These constraints include credit crunch to the industrial sector, high energy cost and unreliable supply of electricity, and shortage of foreign exchange for industrialists to import raw materials and machineries.

MAN expressed concern that high cost of credit to the industrial sector could paralise the NIP. It said that a sweeping industrial policy is entirely dependent on a functional financial transmission mechanism, adding that if the banking ecosystem maintains severe risk aversion and prohibitively high lending rates, the promised capital cannot flow from government blueprints to the factory floor.

It said: “A persistent credit squeeze can directly sabotage the successful execution of the 2025 Nigeria Industrial Policy (NIP). Without accessible, single-digit credit that supports domestic manufacturers to execute capital expenditures and modernising operations, the NIP’s ambitious targets for economic diversification and industrial revitalisation become practically unfunded and unrealisable mandates.

“A visionary industrial policy without a functioning credit transmission mechanism will amount to a well-drafted but comatose aspirational policy. It is practically impossible to kick-start a manufacturing revolution without actively financing the factories tasked with building it.”

It called on the Central Bank of Nigeria (CBN) to further reduce the Monetary Policy Rate (MPR) to below 20 per cent, especially for manufacturers.

MAN stated that credit to its members as at May 2026 remained exploitatively high at an average of 27 per cent prime lending rates and 35.6 per cent maximum lending rates in major commercial banks. This has created an environment where borrowing for long-term manufacturing capital expenditure is financially unviable.

Nigeria First procurement policy

The MAN tasked the government to pass the NIP as an Act of Parliament to make targets and incentives legally binding, and to prevent arbitrary changes or abandonment by future administrations

It called for the integration of the Bureau of Public Procurement (BPP) portal with a local content registry, and automatically blocking budget releases to MDAs that fail to meet a 60 per cent local procurement target.

“Enact a Local Patronage Compliance Act requiring all MDAs to grant Nigerian manufacturers the right of first refusal in procurement, mandating a temporary “Certificate of Non-Availability” from MAN (through FMITI) before any foreign purchase.”

CPPE VIEW

The Chief Executive Officer of Centre for Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said that the NIP is arguably the country’s most comprehensive industrial policy framework in decades.

Yusuf said that the policy well aligned with Nigeria’s Agenda 2050, the National Development Plan, the opportunities presented by the African Continental Free Trade Area (AfCFTA), and the global transition towards digital and green industrialisation.

He, however, said that the success of any industrial policy ultimately depends not on the quality of its design but on the quality of its implementation.

He said, “Industrial policy alone cannot overcome an uncompetitive business environment. Manufacturers cannot compete globally while contending with prohibitive energy costs, inadequate electricity, expensive finance, inefficient logistics, multiple regulatory burdens and policy uncertainty.

“Under such conditions, even the best-designed industrial strategy will struggle to achieve its objectives. The central challenge is therefore no longer the absence of industrial policy. The challenge is to create an operating environment in which enterprises can compete efficiently, invest confidently and expand sustainably.”

He said that the experience of successful industrial economies showed that they invested in productivity, technology, skills, infrastructure, efficient institutions and export capability. Their industrial policies were ultimately designed to improve competitiveness rather than protect inefficiency.

The CPPE, therefore, proposed five pillars that provide the strategic framework for Nigeria to emerge as one of Africa’s leading industrial economies. The first of these pillars is competitive production costs. Yusuf stated that industrial competitiveness begins with the economics of production.

“No manufacturing economy can achieve sustained competitiveness where firms face unreliable electricity, high logistics costs, expensive finance, multiple regulatory charges and deficient infrastructure. Reducing the structural cost of doing business should, therefore, become the foremost objective of industrial policy. This requires reliable and competitively priced electricity, efficient transport corridors, modern ports, lower logistics costs, affordable long-term industrial finance, predictable taxation and streamlined regulation,” Yusuf said.

The second pillar is productivity and innovation. He said that while competitive production costs are essential, long-term advantage ultimately depend on productivity.

“As manufacturing becomes increasingly technology-driven, firms compete less on labour costs and more on efficiency, innovation, digital capability and continuous improvement. Nigeria cannot build a sustainable industrial future on low wages alone. We must compete through higher productivity, superior quality, faster innovation and more sophisticated production systems.

“Achieving this requires greater investment in research and development, stronger collaboration between universities and industry, wider adoption of automation, digital manufacturing, artificial intelligence, advanced analytics and other Industry 4.0 technologies.”

Another pillar in the CPPE’s strategic framework is competitive value chains. It averred that industrialisation is not simply about establishing factories; it is about building integrated industrial ecosystems.

“Competitive manufacturing depends on efficient suppliers, logistics providers, warehousing, standards institutions, financial services, technology companies, research organisations, skilled professionals and export infrastructure operating as interconnected components of a productive value chain.

“Nigeria already possesses abundant agricultural resources, significant mineral deposits, an expanding services sector and one of Africa’s fastest-growing digital economies. The strategic priority is to connect these assets more effectively so that greater value is created domestically before products enter regional and global markets,” the CPPE said.

The fourth pillar of the framework is export competitiveness. Yusuf noted that Nigeria’s large domestic market provides an important foundation for industrial growth, but stated that domestic demand alone could not sustain long-term manufacturing expansion.

He said: “Successful industrial economies produce for both domestic and international markets. Export competitiveness must, therefore, become a central objective of industrial policy.The African Continental Free Trade Area presents an unprecedented opportunity to expand manufactured exports, but preferential market access alone will not guarantee success.

“International markets reward firms that consistently deliver competitive prices, superior quality, reliable supply, timely delivery and compliance with global standards. Our ambition should be clear: manufacture in Nigeria, compete across Africa and progressively integrate into global value chains,” Yusuf said, adding that “export competitiveness remains the ultimate test of industrial capability.”

The last pillar in the CPPE’s framework is institutions that enable enterprise. It said that strong industries require strong institutions and that investors value policy consistency more than policy announcements, transparency more than administrative discretion, and efficient institutions more than generous incentives.

“Nigeria must, therefore, continue strengthening regulatory quality, customs administration, commercial dispute resolution, contract enforcement, public procurement, infrastructure governance, property rights and policy coordination. Effective institutions reduce uncertainty, lower transaction costs and strengthen investor confidence. Weak institutions do precisely the opposite. Competitiveness flourishes where institutions consistently enable enterprise rather than constrain it.

“Taken together, these five pillars constitute more than an industrial policy framework. They provide a national competitiveness strategy capable of transforming manufacturing into the principal engine of productivity, investment, exports and inclusive economic growth,” CPPE said

NESG PESPECTIVE

In a report captioned, “Turning Potential into Progress: Accelerating Nigeria’s Industrialisation for Economic Transformation and Inclusion,” the Nigerian Economic Summit Group (NESG), proposed a KPI-driven framework that links industrialisation progress with social inclusion through three mutually reinforcing pillars, namely inputs, outputs, and outcomes.

The framework recognised that weaknesses in any one pillar can undermine the effectiveness of the others, underscoring the need for a holistic approach to industrial development. It demonstrates that while industrialisation inevitably entails short-term adjustment costs, its long-term developmental gains depend on complementary policies that expand opportunities, strengthen household welfare, and promote broad-based participation in economic activities.

The first pillar of the NESG’s KPI framework is the inputs that represent the foundational conditions required for successful industrialisation.

These inputs include effective industrial policies and institutions that provide strategic direction and strengthen government effectiveness. They also include reliable infrastructure, particularly electricity, transport, and telecommunications that reduce production and logistics costs. Others are skilled and productive workforce that are supported by investments in tertiary education and digital competencies as well as technological capability and innovation, driven by research and development (R&D).

The second pillar is outputs, which include what industrialisation produces. It captures the immediate economic gains generated by industrialisation. “When supported by strong inputs, industrial development increases manufacturing value addition, productivity, and competitiveness.

The third pillar is outcomes, which is how industrialisation benefits society and represents the broader socioeconomic outcomes arising from sustained industrial progress. As industrial output expands, firms create more decent and productive jobs, raising household incomes and improving living standards. Industrialisation also stimulates skills development and human capital accumulation through learning-by-doing and technological upgrading.

Stage-Sensitive Industrial Policy

The NESG said that China’s industrialisation demonstrated how industrial policy could evolve alongside a country’s stage of development and long-term economic objectives.

It noted that rather than relying on industrial policy alone, China combined strategic planning with complementary investments in infrastructure, education, technology, and institutions to build a globally competitive manufacturing sector. This coordinated approach transformed China into the world’s largest manufacturing economy while delivering rapid economic growth, large-scale poverty reduction, job creation, and expanding social protection, illustrating the complementarity between industrialisation and inclusive development.

Key Lessons for Nigeria from China

Adopt a phased approach to industrialisation by piloting reforms in a limited number of strategically located industrial zones before nationwide expansion.

Link government support to measurable performance indicators, such as investment, employment, exports, productivity, and technology adoption.

Target industries selectively and temporarily, supporting sectors with strong potential while gradually withdrawing assistance as firms become internationally competitive.

Strengthen subnational implementation capacity by encouraging healthy competition among states to attract investment and improve service delivery.

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