Lagos and Ogun industrial zones are responsible for 86 percent of manufactured items consumed in the country and exported, with a total manufacturing production value of N3.2 trillion in the second half of 2021.
According to the Manufacturers’ Association of Nigeria (MAN), of the N3.73 trillion worth of goods produced across 14 industrial zones across the country, Lagos (Ikeja and Apapa) and Ogun zones accounted for the majority of locally produced goods, with the remaining 12 zones accounting for N526 billion.
This supports the assumption that Lagos and Ogun remain the country’s industrial centres.
The Ikeja zone in Lagos, for example, had a production value of N1.81 trillion, while the Apap zone had a value of N526.9 billion. In the second half of the year, the Ogun industrial zone produced commodities worth N867.3 billion.
In 2021, the manufacturing sector’s production value was N7.03 trillion, up from N4.42 trillion in 2020.
According to MAN, the increase in manufacturing production value in the second half of 2021 was due to an increase in cement production due to the new BUA cement factory in Sokoto; the new African Glass factory, which produces glass products; and the activities of five newly established paper mills that recycle waste paper into cartons.
MAN observed that, despite the manufacturing sector’s improved performance this year, it is still performing well below its potential growth and contribution to national output due to the nearly countless obstacles it faces.
“We recommend, first and foremost, that the government create credible incentives for investment in the development of raw materials locally through backward integration and resource-based industrialisation projects, based on direct feedback from manufacturers.”
“We recognize the critical need for investment and manufacture of Active Pharmaceutical Ingredients (API) in the country,” MAN said. “This should be suitably incentivized to promote major private investments.”
Although MAN claimed that electricity supply from the national grid had improved marginally since 2019, as evidenced by the average daily electricity supply and outage, local producers claimed that grid electricity supply had remained insufficient, forcing manufacturers to invest heavily in alternative energy sources in order to maintain uninterrupted production activity.
While some businesses have invested in diesel generators, others have chosen to use gas generators.
They bemoaned the fact that spare components and other energy management devices such as stabilizers, UPSs, and inverters add to the costs involved with these facilities.
“Unfortunately, the combined spending on these alternative energy sources, as well as the high tariff connected with supplies from national grids, account for the majority of the high cost of production in the sector, with energy accounting for a massive 40% of the total,” it continued.
According to MAN, expenditure on alternative energy sources in the manufacturing sector was N45.04 billion in the second half of 2021, compared to N57.75 billion in the equivalent half of 2020, suggesting a N12.71 billion or 22 percent decrease over the period.
However, as compared to the N32.18 billion reported in the previous half, the total climbed by N12.86 billion. In 2021, expenditure on alternative energy sources was N77.22 billion, down from N81.91 billion in 2020. The slight improvement in the national electricity supply over the timeframe was attributed to the drop in expenditure on alternative energy sources in 2021.