The global manufacturing sector has undergone a tumultuous decade: large developing economies leaped into the first tier of manufacturing nations, a severe recession choked off demand, and manufacturing employment fell at an accelerated rate in advanced economies. Still, manufacturing remains critically important to both the developing and the advanced world. In the former, it continues to provide a pathway from subsistence agriculture to rising incomes and living standards. In the latter, it remains a vital source of innovation and competitiveness, making outsized contributions to research and development, exports, and productivity growth.
Over the last five years, Nigeria’s top non-oil exports have been dominated by raw materials. For instance, a Central Bank of Nigeria (CBN) monthly report in February 2021 revealed that in November 2020, Olam Nigeria Limited topped the list with a value of $26.65m from the export of cocoa beans, cashew nuts and sesame seeds to Turkey and China.
A notable manufacturer of finished goods that has remained consistently among the top five non-oil exporters over the last three years is British American Tobacco (Nigeria) Limited (BAT Nigeria) from the export of cigarettes to several West African countries. In the referenced monthly CBN report, BAT Nigeria had total exports of $12.57m.
This is made possible due to the Company’s $185m cumulative investment in a state-of-the-art factory in Ibadan which has created over 350,000 direct and indirect jobs for Nigerians. BAT Nigeria’s operations have also earned the country over $900m in taxes and other levies in 20 years, while repatriating over $100m in foreign exchange per annum and supporting additional foreign direct investments of USD30m by a principal supplier.
Data from the National Bureau of Statistics reveals that up until Q4 2021, Sesame seeds remained Nigeria’s major non-oil export, only recently toppled in Q1 2022 by Urea (which is a by-product of crude oil). These are indicators that show the urgency with which Nigeria must improve her manufacturing capacity. The list of top non-oil exporters must be increasingly populated by manufacturers of finished products in both volume and value.
Nigeria needs more companies that will establish factories to increase the country’s output of finished goods. For instance, companies that will process cocoa into export quality chocolates rather than aggregators that export cocoa beans. Factories that will produce leather bags, shoes and other accessories rather than our heavy exports of processed leather.
The same applies for other raw material exports such as sesame seeds, cashew nuts, gum Arabic etc. such that Nigeria will enjoy more FDI; increased foreign exchange repatriation; improved earnings from taxes and levies as well as job creation from many more companies as it currently does with BAT Nigeria.