The Nigerian Economic Group Summit said Nigeria’s weak manufacturing sector was the main factor behind the currency crisis. Senior Economist at NESG Dr.
Wilson Erumebor reveals this in a recent article published by Foresights Africa. Entitled “Nigeria in 2023:
Closing the Productivity Gap and Boosting Economic Resilience,” the report says the country has struggled over the past seven years, especially after two recessions.
He added, “In the last seven years, there have been a shift of economic activity towards agriculture and a slowdown of the manufacturing sector. Part of the problem facing the economy is the neglect of the manufacturing sector.
In fact, Nigeria does not produce enough for local consumption and export. The consequences of the densely populated country’s weak manufacturing base are evident in foreign exchange shortages, job restrictions on incoming workers, and import bills currently barely covered (or supported) by export earnings.
Unemployment and underemployment rose to a record high of 56.1% in 2020, the report said.
According to Erumebor, “90% of workers are employed in low-productivity sectors, i.e. non-tradable agricultural and service sectors.
“This means that the kind of jobs needed to generate income growth and lift many Nigerians out of poverty are not available in large numbers.”
He urged the incoming administration, to work with stakeholders, and develop an agenda for economic and social inclusion.
“At the heart of such an agenda must be improving the lives of the average Nigerian. This agenda must also include a practical strategy on how to structurally transform the economy, moving labor and economic resources from low productivity sectors to high productivity sectors.”
The senior economist further posited the need to design and implement national skills programmes aimed at upskilling young Nigerians, to ensure many more embrace digital skills and capabilities.
At the middle of the productivity ladder sits manufacturing. The sector has a much higher productivity level than agriculture and can accommodate, in large numbers, the kind of labour that is abundant in the country. Nigeria’s rising population (which is projected to reach N428m by 2050), the existence of mineral resources, and the adoption of a single market in Africa—the African Continental Free Trade Area —present a case for why manufacturing would thrive in Nigeria.”
Erumrbor highlighted the need for the incoming government to address the burgeoning infrastructure deficit and inadequate power supply, which limit the competitiveness of the manufacturing sector.
With a clear industrial policy development strategy, he said supporting the scale, efficiency and competitiveness of regional manufacturing companies is critical to building economic resilience to future vulnerabilities and shocks.
“These policies should be integrated into Nigeria’s AfCFTA strategy and support the transformation of small and medium-sized enterprises (SMEs), which are often the driving force behind job creation in the country.”