Having the largest market in Africa, Nigeria's manufacturing industry is on a growth trajectory due to various government interventions/programmes implemented in recent years. The sub-sector’s capacity utilization has gained a 20% increase in average growth rate between the 1990s and recent years and its contribution to National GDP has also grown steadily to an annual average of 9% within the past five years.
According to the Nigeria's Industralisation Plan, the Manufacturing sector in Nigeria is geared towards accelerating industrial capacity to increase the sector’s contribution to GDP. The Federal Government of Nigeria hopes to generate an additional US$20 billion to US$30 billion in manufacturing revenues over the next 3 to 5 years and substitute imports and diversify exports, diversify the economy from petroleum, create jobs and generate wealth. Foreign investors are welcome to participate wholly or in partnership with local companies in manufacturing or industrial projects like Food processing - Fruits, vegetable oils, oil seeds, roots and tubers processing, Cereal and grain milling; Sugar production, Confectionaries and beverages, ceramic and glass production, solid mineral processing and so on.
According to the Nigeria Investment Promotion Commision (NIPC), Lagos and its surroundings are home to about 60% of Nigeria’s industrial activities. Other key industrial centres are Kano, Aba, Ibadan and Kaduna. Nigeria’s most important manufacturing industries include beverages, cement, textiles and chemicals.
The garment and footwear industry accounts for about 2% of the national GDP. It once ranked as the second largest in Africa with over 250 factories operating above 50% installed capacity. At its peak, the Nigerian Textile industry employed about 25% of the total manufacturing workforce and averaged an annual growth of 67% mostly attributed to locally grown cotton. The industry is currently estimated to be able to produce about 1.4 billion different pieces of textile products. With huge demand for clothing by a fast-growing population, the industry has been unable to meet domestic demand for African prints, shirting, bed sheets, furnishing fabrics towels, embroidery lace, garments, table and bed linen, guinea brocades, wax prints, java prints, jutes, fishing nets, among many other textile products. To this end, several Government initiatives, such as the N100bn Textile and Garment (CTG) Intervention Fund managed and disbursed by the Bank of Industry (BOI), are in place to revamp the industry, attract investments and safe guard it from extraneous factors
Cement manufacturing has grown to be an important activity in the economy with Nigeria becoming home to the world’s largest emerging cement companies. The demand for cement is seasonal in nature, and it is expected to continue to grow most especially as there exists a huge housing deficit and the increasing demand to use cement in road construction. As at the year 2020, The industry is largely dominated by two firms controlling over 80% of the domestic market. However, the industry’s prospects for growth has attracted investments from both domestic investors and foreign multinational companies. Over the last five year, there has been aggressive drive towards the modernization and expansion of cement plants which have seen the capacity of the industry multiplied, currently at over 45million tones, and efficiency improved. With this in progress, the industry has begun expanding to neigbouring countries like Cameroun and began export to neighbouring West African markets putting Nigeria on the brink of meeting its target of local demand and making the country a net exporter of cement.
The food processing industry is another vastly developing industry in the Nigerian manufacturing sub-sector. The industry has grown at an average of 3% over the last 5 years contributing an annual average of 4% to the GDP, employing about 5% of the local workforce. Although, the industry is composed of mainly small and medium enterprises, there is a consistent upsurge of new entrants of multinational food companies and an aggressive expansion of existing operations geared to meet the demand of the local market. This has been motivated by the apparent expansion of the middle-class armed with rising incomes and growing awareness for food safety and dietary quality prompting demand for low-carbohydrate, low-fat, and even sugar-free food and beverages.Some of the new investments on the horizon includes Dangote Group’s $800 million investment in dairy production, consortium of Vicampro Farm, BlackPace and Kiremko planned investment in potato processing factory in Plateau and Kaduna expected to cost about US $ 45 million with a processing capacity of 30,000 to 40,000 tons, the plant will be the largest in West Africa, and a host of large bakeries, biscuit and waffle factories are increasingly being built. These investments would complement existing investments by Cadbury Nigeria, Unilever Nigeria, De-United Foods Industries, FrieslandCampina WAMCO Nigeria, and many more.Despite the increasing investments by local processors and continued upsurge of multinational companies into the industry, bulk of the intermediate and processed inputs utilized are still imported. The increasing importation of food, beverage and packaging technology, 15% in 2017 alone, there is an air of relief that most of these imports would be soon be available locally, more so that the basic raw materials, agricultural produce such as cocoa, peanuts, palm oil, corn, rice, sorghum, millet, cassava, yams, rubber, cattle, fish among many others, are available locally.
Nigeria has the second largest beer industry in Africa, next to South Africa. Despite the global downturn in beer consumption, Nigeria’s market continues to thrive. The industry is expected to continue to grow at about 23% over the next few years remaining a vital component of the manufacturing sector of Nigeria.The landscape of the industry is dotted by major multinational brewing companies jostling for position in the domestic brewing market. The market is regional in nature with local brands holding sway in their respective regions. At the national level, the industry has moved from being a duopoly market to an oligopoly one with Nigerian Breweries Plc (NB Plc) 61%, Guinness Nigeria 27%, and Consolidated Breweries 10% being the major market shareholders. South African Breweries Miller (SABM), a more recent entrant to the market, continues to grow its influence in the market.NB Plc, one of the local subsidiaries of the global brand Heineken, has the largest capacity and coverage, with about 8 breweries located across the country and estimated to have total annual capacity of 13.5mn hl. Guinness, owned by Diageo, operates 4 breweries with an estimated total annual of 7.5mn hl. SABM has an estimated capacity of 1.8mn hl built mainly through the acquisition of Pabod Breweries in Port Harcourt, International Breweries in Ilesa and Onitsha in a strategic drive to control regional markets. Despite this capacity coupled with other smaller plants, there is still a gap demand of about 53m hl due largely to the growing population with its attendant vibrant youth and growing middle class.
In addition to the general investment incentives with tax holidays and relief, the following are applicable to the Manufacturing sector.