A new report by the Nanyang Technological University’s Centre for African Studies has urged the Nigerian government to reconsider its industrial policies.
It urged the government to focus on industries, such as fertilisers, food packaging, and fast-moving consumer goods, where the country had shown promises.
According to the report, a sound industrial policy would need to be backed by an incentive package that is simple, clear, and impervious to abrupt changes.
It warned the government not to rely on a combination of protective tariffs, import quotas, exchange rate controls, preferential licensing terms, and subsidised loans, which could distort markets in economically inefficient ways.
The report cautioned that policies must be integrated with a trade policy that would see Nigeria gradually bring down tariff and non-tariff barriers.
It read in part, “The economies of scale advantages associated with the large size of Nigeria’s population and a resilient services sector provides an opportunity for Nigeria to view the AfCFTA single market as a chance to position itself as a regional manufacturing hub.
“The opening of the Lekki Deep Sea Port could prove to be a game changer. Located within the 850-acre LFZ, the seaport and its proximity to the LFZ could revive manufacturing, create 150,000 direct jobs and generate up to $360bn over the life-span of the port.”
According to the report, another promising development is the Remo Economic Industrial Cluster in Ogun State.
The industrial cluster includes three economic zones and will be constructed and operated by ARISE Integrated Industrial Platforms, a developer and operator of leading industrial zones in Africa.
The zones that are expected to be fully operational by the fourth quarter of 2024, will focus on agro-processing, light industrials, pharmaceuticals, and logistics.
The report believed those zones would create nearly 12,000 direct and 20,000 indirect jobs and aim to attract an estimated $1bn in FDI in the first development phase.
It read further, “Once Nigeria has scored a few such quick wins in the next two to five years; it must prioritise second-order reforms that are laser-focused on good governance. This means ending the culture of rent-seeking —a barrier that is likely to keep manufacturing restricted to SEZs.
“Firms operating outside such zones are forced to offer gratifications to public officials for reasons such as accessing public utilities, clearing goods at ports, and obtaining licenses and permits.
“This increases the cost of manufacturing in Nigeria. Creating backward linkages will require policy reforms that make the entire economy conducive to manufacturing, rather than keeping it fenced inside a protected zone.”
The report also noted that it would be important for policymakers to take note of the unique geographic and cultural environments of the different regions of the country as a one-size-fits-all approach is unlikely to work.
