Outline the ways in which the federal government has encouraged industrialization in Nigeria in recent years.

Answer Details

Industrialisation means expanding the manufacturing and processing sector so that a country produces more finished goods rather than relying on raw materials. Successive Nigerian governments have used a range of policies to encourage it. The main ways are outlined below.

• Provision of infrastructure: building roads, railways, ports, power stations and water supply to lower the cost of setting up and running industries.
• Establishment of industrial estates and free-trade zones: providing serviced land and facilities where industries can locate together.
• Provision of finance: setting up development banks and lending institutions (such as the Bank of Industry) to give industrialists cheap and long-term loans.
• Tax incentives: granting tax holidays, pioneer status, and relief on import duties for machinery and raw materials to reduce the cost of production.
• Protection of infant industries: imposing tariffs, quotas or import bans on foreign goods so that local industries can grow.
• Indigenisation and local participation: policies to transfer ownership and management of enterprises to Nigerians and to encourage local investment.
• Manpower development: establishing technical colleges, polytechnics and industrial training schemes to supply skilled labour.
• Encouragement of foreign investment: creating agencies and incentives to attract foreign capital, technology and partnership.
• Establishment of research institutes and standards bodies: to improve product quality, adapt technology and support raw-material processing.
• Local sourcing of raw materials: encouraging industries to use locally available inputs and backward integration to reduce dependence on imports.
• Direct government investment: setting up public enterprises in key areas such as steel, petrochemicals and fertiliser where private capital is insufficient.
• Stable macro-economic and monetary policies: providing a favourable exchange rate, credit and interest-rate framework to support manufacturing.

Together these measures aim to raise output, create employment, diversify the economy away from primary production and reduce dependence on imported manufactured goods.