SUSTAINABLE INDUSTRIAL GROWTH AND ECONOMIC DEVELOPMENT IN NIGERIA 1990 -2015

SUSTAINABLE INDUSTRIAL GROWTH AND ECONOMIC DEVELOPMENT IN NIGERIA 1990 -2015

ABSTRACT

The study was anchored on the general notion that sustainable industrial growth is very vital to economic growth and development. Nigeria has transited from different industrial phases and development stages without meaningful contribution to growth and development in Nigeria. The contributions of the sector, growth and employment is generally very low. It is a fact that the sustainable transformation and industrial growth are inextricably intertwined. Investigations by scholars have shown that very clearly that higher productivity is a sure means boosting sustainable economic growth and raising the standard of living in Nigeria. Formulating effective scheme have undoubtedly many economics to pulled out of global recession and set on course of sustainable growth.  According to statistics recently the industrial sector of the economy which is made of crude petroleum and natural gas, solid minerals and manufacturing, contributed an average of 40% to the national gross and domestic product between 2007 and 2011. Manufacturing which should ordinarily form the birth rock of industrialization contributed less to the while crude oil and gas contributed 95%. The above is a glaring indication that the industrial sector of Nigeria is still in state of gross underdevelopment despite various reforms being implemented by the Federal Government. Although infrastructural problem must be acknowledge as a big challenge to industrial growth I believes there are more critical issues stifling the sustainable growth and development in the industrial sector. However the situational in the industrial sector is not all together gloomy. Specifically, Manufacturers Association of Nigeria (Man) reported that most of the variable that measured performance of the real sector have on the upward swing. Albeit marginal capacity utilization of the sector is now about 49% compared to the 47.5% average in 2011, indicating that more companies in the country are putting more resources to sued in there factoring than they did in previous years. The value of industrial production has also increase, although marginal from N130 billion to almost N350 billion at the end 2012.    

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND TO THE STUDY

The structure of the Nigerian economy is typically of an underdeveloped country. Over half of the Gross Domestic Product (GDP) is accounted for by the sector with agriculture continuing to play an important role. The oil and gas sector in particular continues to be a major driver of the economy, accounting for over 95% of export earnings and about 85% of government revenue between 2011 and 2012. The sector contributed 14.81 and 13.8% to GDP in 2011 and 2012, respectively. It also recorded an increase in reserves from 37.119 billion barrels (bbs) in 2012 from 36.042 bbs in 2011 (Chete et al, 2013)In contrast, the industrial sector in Nigeria (comprising manufacturing, mining and utilities) accounts for a tiny portion of economic activity (6%) while the manufacturing sector contributed only 4% to GDP in 2011. This is despite policy efforts, over the last 5 decades, and, in particular, more recently, that have attempted to facilitate the industrialization process. Despite substantial adjustments during the past years, Nigeria’s industrial policy adopted since independence in 1960 was dominated by goals and instruments of the 1970s. The policy has been one emphasizing Import Substitution (IS) strategy, which was necessary and inevitable for Nigeria having regard to her colonial experience in the area of economics and trade. In the 80s, it was felt that the strategy ought to have advanced to the stage of import displacement; that is producing locally made goods which are different from at least similar to former inputs, but which are based on locally available inputs and technology and on real needs (as distinct from imported consumption patterns) of the economy. Such a strategy of import displacement was meant to significantly replace the erstwhile strategy of simple import substitution, which involved the importation of inputs for the local production of goods identical with the former exports. An import displacement strategy was considered to be a most effective avenue for significantly enhancing local value added, stimulating the development of home grown and modified of adapted technology and minimizing the offshore cost of manufacturing. The government also agreed that import substitution and displacement ought to be complemented by the stimulation of export oriented industrial enterprise (Imevbore, 2012). Put concretely, one philosophy, which was utilized with the hope to promote economic development in the 1970s, was the Indigenization Decree of 1972 and 1977. The idea behind the indigenization decree was to give Nigerian’s greater opportunities compared to preceding years to participate in the productive sectors of the economy. The decrees sought also to limit the sections of the economy in which foreign companies could operate. The overall aim was to push foreign capital into higher technology areas thereby creating opportunities for Nigerian in other areas. The indigenization policy was only partly successful in that, it did not shift control to Nigerians and it reduced the extent of Foreign Direct Investment (FDI), which came into the country (Dayo, 1999).