Oil boom takes its toll
Throughout the 1990s and 2000’s, Nigeria’s over reliance on oil export made production from the manufacturing sector to drop significantly. Most of our manufacturing firms were not export orientated and they lacked competitive efficiency, causing the competitive companies to relocate their factories abroad. A few key industries such as beverages, textiles, cement and tobacco kept the sector afloat but even those companies were operating at half of their capacity. To this day, production is mainly located in Lagos and its periphery, and to a lesser extent some other commercial towns such as Kano and Kaduna.
Data obtained from the Manufacturers Association of Nigeria [MAN] showed that total manufacturing output in the formal sector in Nigeria was N6.84 trillion in 2010. It increased over the following two years by N1.3trillion or 19.37 per cent in 2011 to reach N8.17trillion and by N1.65trillion or 20.22 per cent in 2012 to reach a total of N9.82trillion. In all three years, the formal manufacturing sector was dominated by output from the Food, Beverages and Tobacco Activity, with N4.93trillion or 72 per cent of output contributed in 2010. Despite the activity’s growth of N488billion or 9.91 per cent in 2011 and N712.7billion or 13.15 per cent in 2012, this total output share declined to 66.32 per cent and 62.42 per cent in 2011 and 2012 respectively.
The second largest contributor to manufacturing output was the Textile, Apparel and Footwear Activity, which at N792.69billion in 2010 represented 11.58 per cent of total output. With growth of N398billion or 50.21 per cent in 2011, the total output of N1.19trillion represented 14.57 per cent of total output.
This share increased further in 2012 with output of N1.65trillion representing 16.82 per cent of the total, due to output growth of N462billion or 38.81 per cent. Manufacturing and Non-Metallic Products were the third and fourth greatest contributors to manufacturing output, representing N392billion or 11.58 per cent of the total and N187billion or 5.73 per cent of the total in 2010.
Between 2000 and 2008, Nigeria experienced its worst situation in manufacturing as 820 companies shut down or suspended production. Worst hit was the textile and garment subsector. At its peak, the textile industry alone employed nearly 700,000 people (making it the second largest employer of labour in Nigeria after the government) and had a turnover of $8.95 billion. The industry witnessed a catastrophic collapse from 175 firms in the mid-1980s to ten factories in stable condition in 2004, while employment in the industry plunged from 350,000 to 40,000.