Abstract
This paper
analyses recent trend and spatial patterns of manufacturing in Nigeria. In
particular, the paper shows that industrial development in the country involved
considerable artisanal crafts firms in the early stages and grew progressively
in number over the years to large-scale manufacturing. The pattern of the distribution
of manufacturing industries at the city level indicates that there is marked
concentration of manufacturing establishments in the southern part of the
country, and especially Lagos, Ibadan and Benin in the southwest. Other locations of
relative high concentration of industrial
establishments are Kano in the North;
and Enugu and Port Harcourt in the southeast. Although, this paper shows that
production subcontracting increased and varied amongst subcontracting
firms, production subcontracting relationships are concentrated in a few
locations. The paper concludes that the spatial pattern could change if industrialists
adopt the strategy of industrial linkages, and especially production subcontracting
which has become a driving force in contemporary industrial development efforts
in the world today. It is expected that the situation could be better enhanced
given the ongoing privatization of industrial concerns in Nigeria.
Trends in
Nigeria’s industrialization
The growth in
industrial activities discussed in this section is in three phases: the
pre-colonial era, the early post-colonial era, and events since the mid-1980s.
Pre-colonial era
The pre-colonial
era, that is, the pre-1900 economy of Nigeria, featured considerable craft
industries in the various clans and kingdoms. Modern factory activity was then
hardly known (Onyemelukwe 1983). Prominent
among these
craft industries that featured in local and inter-regional trade were artifacts
of wood, brass and bronze, leather, hand-woven textiles and bags, iron workings
and fire burnt pottery from local clay. The forest zone, especially in and
around the old Benin Kingdom, excelled in wood and bronze workings. The
Awka-Nri-Igbo-Ukwu area of the Igbo heartland was famous for pottery,
woodcarving and blacksmithing. The Oyo area excelled in calabash carving and
textile weaving and dyeing. Bida area was noted for glass and brass works. The
Hausa-Fulani made leather artifacts while the Ibibio-Efik communities were
famous in woodcarving and rafia embroidery.
One major
characteristic of these craft industries was that they featured in the
different locations in a close link with the available raw materials. However,
the crafts industry has declined considerably following the superior competition from
modern industrial activities, particularly manufacturing. Onyemelukwe (1983)
notes that Nigeria has embraced the factory type industrialization as the main
panacea to her underdevelopment. The coming of Europeans, especially in the
wake of formal trade contact, brought about the first widely recognised forms
of modern industrialization. The slave trade yielded priority of place to ‘legitimate
trade’ (Flint 1960), in industrial raw materials obtainable in this part of
West Africa. The need then arose for valorization (Aboyade 1968; Mabogunje
1973; Ayeni 1981; Onyemelukwe 1983).
Valorisation
involved the carrying out of the initial processing of raw materials with the
object of removing waste matter, improving the quality or converting the
produce into a form in which it could be more easily stored and transported
before being exported. For instance, the extraction of palm oil from the pulpy
pericarp of palm fruits, which was crudely processed, was by the 1920s better
and more economically handled in the ‘pioneer oil mills’. Cotton lint was no
longer extracted through the laborious and slow manual extraction process but
mainly handled in modern ginneries. The forest logs were processed as sawn
lumber mainly in power-driven sawmills before being exported to Europe. Considerable
finishing operations including printing and publishing, baking and furniture
works, also featured from the beginning. Whereas processing was geared towards
the rapidly expanding Ajayi: Recent Trends and Patterns in Nigeria’s Industrial
Development 143 metal, furniture and fixtures, structural metal products and
fabricated metals. The manufacture of agricultural and special industrial
machinery and equipment, household apparatus, and transport equipment
contributed a low share of value
added goods (see Teriba et al. 1981 for details). This growth in manufacturing
however witnessed a period of lull following the political crisis which
culminated in the civil war until the early 1970s. As a part of the reconstruction
efforts, the Second National Development Plan, 1970-74, which had the
objectives of a united, strong and self-reliant nation; a great and dynamic
society; a just and egalitarian society; a land of bright and full employment
for all citizens; and a free and democratic society, had as its
major policy
thrust:
(i) To promote
even development and fair distribution of industries in all parts of the
country;
(ii) To ensure a
rapid expansion and diversification of the industrial sector of the economy;
(iii) To
increase the incomes realized from manufacturing activity;
(iv) To create
more employment opportunities;
(v) To promote
the establishment of industries which catered for over seas markets in order to
earn foreign exchange;
(vi) To continue
the programme of import-substitution, as well as raise the level of
intermediate and capital goods production;
(vii) To
initiate schemes designed to promote indigenous manpower development in the industrial
sector; and
(viii) To raise
the proportion of indigenous ownership of industrial investments.
To attain these
goals, the government laid down priorities from time to time and initiated
measures to achieve them, such as reconstructing damage industrial capacities,
the promotion of expansion of the intermediate and
capital good
industries in order to raise the contribution of value added in the manufacturing
sector, and the promotion of rapid industrial development etc. The situation
continued in this manner to the mid-1980s.
Events since
mid-1980s
The industrial sector
of the Nigerian economy improved over the years. The relative share of
manufacturing industry in the GDP increased from 19.8 percent in 1966–1967 to
32.4 percent in 1971–1972 (Teriba and Kayode Ajayi respectively. However, the
percentage of local sourcing materials decreased
to 46.0 percent
by mid-1989.
Table 1: Some aspects of
Nigeria’s Manufacturing, 1981-2002 (at current price)
Source: Federal
Office of Statistics: National Accounts of Nigeria, 1981 to 1994. CBN-Annual
Report and Statement of Accounts, 2003.
The percentage
of local sourcing of raw materials was high in non-metallic mineral products;
food, beverages and tobacco; and textiles, wearing apparels and leather
industry groups in descending order, and comparatively low in basic metal, iron
and steel and fabricated metal products; motor vehicles and miscellaneous
assembly; and electrical/electronic industry groups.
Spatial pattern
of industrialization
The spatial
pattern of industries discussed here pertains to the number of firms as found
in the various locations within the country. Earlier studies have confirmed
that manufacturing activities in Nigeria are concentrated in a few states and
primarily in a few cities, which are mainly state capitals, ports and major
administrative centres (Schatzl 1973; Mabogunje 1973; Adegbola 1983;
Onyemelukwe 1978; Ayeni 1981a). Thus, there are spatial disparities in the
distribution of industrial establishments. Ajaegbu (1976) has
shown four
industrial-urban conurbations in Nigeria. These are: Lagos-Ibadan, the Kano –
Kaduna – Zaria – Jos, Benin – Sapele – Warri, and Port-Harcourt – Aba – Onitsha
– Enugu conurbations. This spatial disparity in the distribution of
manufacturing activities has often been explained in terms of the need for the valorization
of raw agricultural products or the treatment of raw materials for export, or
through the principle of import substitution adopted by the Nigerian
governments as their industrial planning strategy (Ayeni 1981a).
The result of
valorisation means the establishment of manufacturing industries in areas where
natural resources such as agricultural products and minerals are found (Abiodun
and Aguda 1988). While valorisation meant the establishment in a few cities of
mostly consumer goods industries for which the market existed, import
substitution entailed the importation of machinery, raw materials, and in many
instances, the skilled labour. In spite of the successive development plans
aimed at even distribution of industrial activities in all parts of Nigeria,
industrial activities are still concentrated in a few locations. Table 3 shows
that out of the total of 2,355 manufacturing establishments in Nigeria in 1994;
768 (32.6 percent) were concentrated in Lagos State alone. Kano State had 216
(9.2 percent), Rivers and Imo States each had 212 (9.0 percent) and 171 (7.3
percent) respectively. Bauchi and Katsina States had 8 (0.3 percent) each,
while Abia and Jigawa states had no manufacturing establishments at all.
The pattern of
the distribution of manufacturing industries at the city level in 1989,
indicates that there is a marked concentration of manufacturing establishments
in the southern part of the country, and especially Lagos in the southwest. The
leading position of Lagos in the southwest is clearly shown by the size of the
proportional circle. Other locations of relative high concentration of
industrial establishments are Kano in the North; Ibadan and Benin in the
southwest; Enugu and Port-Harcourt in the southeast. While manufacturing
establishments are concentrated in several locations in the south, they are
found in a few locations in the north. This industrial concentration is further
reflected, and has thus formed the basis for the choice of the Lagos region for
research by Ajayi (1998, 2000, 2001, 2002) The section focuses on networks of
industrial linkages as occasioned by industrial production subcontracting (a
strategic positioning of industrial activities), and privatization in Nigerian
industrial development.
Production
subcontracting experience
The Nigerian
experience shows that production subcontracting linkages started in the early
1960s, the post-independence period. The earliest stage in the adoption of
production subcontracting as an industrial production technique in Nigeria was characterized
by insignificant growth and rapid growth thereafter. However, there was marked
variation in the adoption of production subcontracting by industry groups over
the years (Ajayi 1998, 2002). Whether in terms of number of contractors
involved or volume of production, subcontracting in textiles, wearing apparels
and leather industry group dominates the production-subcontracting scene. While
the number of subcontractors engaged by any contracting firm ranged from one to
a maximum of four, over 50 percent of the contractors engaged the services of a
maximum of two subcontractors. The number of subcontractors engaged varied
markedly especially in food, beverages and tobacco, chemicals and pharmaceuticals
and textiles, wearing apparel and leather industry groups (see Ajayi 1998,
2003a). The dominant form of subcontracting is speciality subcontracting mainly
carried out by independent subcontractors over short distances. Production
subcontracting became very important after the introduction of the Structural
Adjustment Programme in 1986, and it is perceived by industrialists as very
important in reducing the costs of production. The volume of production
subcontracting defined in terms of the monetary values increased and varied
significantly amongst the contracting firms over the years (see Ajayi 1998,
2000 for details). It is further shown that there is no significant
relationship between the volume of production subcontracting and the size and
structural characteristics of contracting firms. It is only in the motor
vehicles and miscellaneous assembly industry group that production
subcontracting accounted for more than 30 percent of the total costs of
production in any of the years. Textiles, wearing apparel and leather industry
group accounted for the largest volume of production subcontracting in any of
the years. While all the industry groups are involved in production
subcontracting within the Lagos region, only five of the industry groups
carried production subcontracting beyond the Lagos region. Production
subcontractors are concentrated in Lagos, Ikorodu, Sagamu and Ibadan in the
Southwest; Jos, Kaduna, Zaria, Kano, and Sokoto in the north; and a few other
locations such as Benin, Owerri, Port-Harcourt (in the south) and Ilorin
(middle belt). For instance, in textiles, wearing apparel
NERFUND (Ndebbio
1997, 2003), and the Nigerian Investment Promotion Decree No. 16 and the
Foreign Exchange (Monitoring and Miscellaneous Provision) Decree No.17 of 1995.
All these were directed at both indirect and direct investment in the Nigerian
economy for improved productivity, growth and development.
Nigeria has thus adopted the macro-institutional
approach to privatization through:
(i) lessening
the dominance of unproductive investment in public sector;
(ii) improving
the sector’s efficiency;
(iii)
intensifying the growth potential of the private sector;
(iv) trimming
down the size of the public sector; and
(v) contributing
to the solution of the country’s fiscal problem, etc.
However, the
issue of privatisation of industrial concerns in Nigeria has received little
empirical investigation. For instance, Udeaja (2003) has shown that although
the two (insurance) firms investigated recorded a significant increase in
taxation after privatization, there was a positive improvement in wage income,
the share of wage income in the value-added of the firms and the share of
workers’ wages to the company’s overall value-added. Perhaps Onyeonoru (2003),
on globalization and industrial performance, is instructive here. He found out
that economic performance of firms in the manufacturing sector during the globalization
period in the study was adversely affected; however, his findings were however
limited to the firms in the food, beverages, and tobacco industry sub-sector.
Most studies have analyzed the policy thrust of commercialization and privatization
in Nigeria (see Obadan and Ayodele 1998; Oriakhi 2001; Odisa-Alegimenlen 2003;
Okoh 2004). There is no known study that has succinctly analysed the issue of
privatisation on the industrial
(manufacturing)
sector of the Nigerian economy.
Conclusion
This paper has
analysed the trend and spatial pattern of manufacturing in Nigeria. In
particular, it has shown that industrial development in the country involved
considerable craft works in the early stages and grew progressively in number
over the years to large-scale manufacturing. The spatial pattern largely
reflects the established reports in the literature that industries are concentrated
in a few locations. However, given the spate of industrial growth, it is hoped
that the spatial pattern could change if industrialists adopt the strategy of
industrial linkages, and especially production subcontracting which has become
a driving force in contemporary industrial development
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* Department of
Geography, University of Ibadan, Ibadan, Nigeria.
Recent Trends
and Patterns in Nigeria’s Industrial Development
Dickson ‘Dare
Ajayi*