Senior Special Adviser on Industrialisation to the President of the African Development Bank (AfDB), Prof. Banji Oyelaran-Oyeyinka, has blamed the neglect of the manufacturing sector for the country’s dwindling economy.
Oyelaran-Oyeyinka, in a lecture he delivered at the 93rd birthday celebration of Anthony Sobo organised by the Nigerian Society of Chemical Engineers Lagos-Ogun branch, said the adoption of neo-liberal strategies in the form of structural adjustment programme (SAP) combined with its dependence on raw materials export was responsible for the disruption of manufacturing strategy it earlier embarked upon.
In ‘Why Nigeria’s Development Lags: Causes and Consequences of Premature Deindustrialisation’, he said Nigeria’s manufacturing production and export performance has stagnated and troublingly has been declining significantly due to historical heavy reliance on oil and raw commodity export, making the economy vulnerable to global shocks.
He said: “Nigeria’s share of manufacturing exports in gross domestic product fell from 1.5 per cent in 2010 to 0.43 percent in 2019. Notice that Thailand’s exports account for two-thirds (66 per cent) of its GDP.
“Herein is the root of our foreign exchange crisis. A nation addicted to consuming luxury products that it cannot manufacture.”
He said Nigeria’s poor performance in manufacturing and as well its weak export capacity is the root cause of its status as a laggard in development.
“It has been eroded over time by weak structural support, poor credit delivery to manufacturers, the well-known poor state of infrastructure, market volatility and unstable macroeconomic environment, among others,” he said.
He noted that in the last few years, Nigeria’s challenging economic situation got compounded by measures that are necessary for longer-term sustainability, adding that the fuel subsidy removal and the liberalisation of the foreign exchange (FX) markets led to naira inflation, especially for food and transportation.
He said Nigeria has been experiencing what he called relative premature de-industrialisation, meaning a declining share of the manufacturing sector in GDP that is manifested in the country’s trade balance in manufactures.
“Measured by nominal GDP, the Nigerian economy has fallen into the fourth place in 2024 behind South Africa, Algeria and Egypt,” he said.
“Not so long ago, Nigeria was the number one economy in Africa. Nigeria’s nominal GDP was $ 509 billion in 2013 compared with $252 billion in 2024. More troubling, the country’s nominal GDP/capita, which measures citizen’s living standard, halved from $2,202 in 2022 to $1,110 in 2024.”
He said that development is signalled by a structural transformation of countries from agrarian, low-technology and low-productivity agriculture that export primary commodities to an industrial country that in turn processes agriculture commodities into high-value products and manufactured goods.
“The mastery of the manufacturing sector provides the greatest opportunities for countries to engage in learning, innovation and manufacturing exports. The outcome is sustained economic growth, employment creation, poverty reduction, greater productivity and reserve accumulation through which a country could maintain a favorable balance of payment (BOP),” he said.
Oyelaran-Oyeyinka said the opportunity cost of Nigeria not having its foundational industrial pillars such as iron and steel, petrochemicals, pharmaceuticals and so on, goes beyond the aggregate loss of dollars it spends yearly to import manufactures and what will have accrued to the country from exports.
“The most fundamental damage is the loss of Technological Learning and engineering mastery that accrues to homegrown engineers through “Learning-by-Production”, “Learning-by-maintenance and innovation by trial-and-error. It is why Nigeria relies today on foreign human capital for the most basic technical and engineering chores.”
