In the modern world, manufacturing sector is regarded as a basis for determining a nation's economic efficiency (Amakom, 2012). However, after the discovery of crude oil in Nigeria in the late 1950s, the nation has shifted from its preeminent developing industrial production base and placed heavy weight on crude oil production (Englama, et al. 2010); not only has this jeopardized its economic activities, it also aggravated the nation's level of unemployment. Nigeria as a giant of Africa has for long been regarded as a nation blessed with abundant human and material resources; however, the underutilization of these potentials has amplified widespread poverty, low standard of living at individual level and rising unemployment in the country as a result of incessant mono-economic practice and drastic neglect of other sectors of the economy such as agriculture, tourism, mining and the manufacturing industry.
In spite of the country's vast oil wealth, the World Bank Development Indicators (2012) has shown that majority of Nigerians are poor with 84.5 percent of the population living on less than two dollar a day. The United Nations Human Development Index (2011) also ranks Nigeria 156 out of 179 countries, which is a significant decrease in its human development ranking of 151 in 2004; and World Bank Development Indicators (2012) have placed Nigeria within the 47 poorest countries of the world. The issue of poverty can be easily traced to mono-economic practice and underutilization of the nation’s endowed resources, especially in manufacturing sector, which could have opened up windows of opportunity in job creation and economic development.
Putting the country back on the path of recovery and growth will require urgently rebuilding deteriorated infrastructure and making more goods and services available to the citizenry at affordable prices. This would imply a quantum leap in output of goods and services. Ogbu (2012) states that no other sector is more important than manufacturing in developing an economy, providing quality employment and wages and reducing poverty. Increasing productivity should be the focus because many other countries that have found themselves in the same predicaments have resolved them through productivity enhancement schemes. For instance, Japan from the end of the World War II and the United States of America from the 1970s have made high productivity the Centre point of their economic planning and the results have been resounding. Also, middle income countries like Hong Kong, South Korea, Singapore and India have embraced boosting productivity schemes as an integral part of their national planning and today they have made significant in roads into the world industrial markets.
Given the importance of high productivity in boosting economic growth and the standards of living of the people, it is necessary to evaluate the role and performance of the Nigerian manufacturing sector. In the light of the foregoing, there cannot be another appropriate time to evaluate the role of the Nigerian manufacturing sector in the economic growth and the development of the country than now.
The history of industrial development and manufacturing in Nigeria is a classic illustration of how a nation could neglect a vital sector through policy inconsistencies and distractions attributable to the discovery of oil (Adeola, 2005). However, Ogbu (2012) argues that the country’s oil industry is not a major source of employment, and its benefit to the other sectors in the economy is limited since the government has not adequately developed the capacity to pursue the more value-added activities of the petrochemical value chain. As a result, the oil industry does not allow for any agglomeration or technological spillover effects, Ogbu (2012) stresses.
From a modest 4.8% in 1960, manufacturing contribution to GDP increased to 7.2% in 1970 and to 7.4% in 1975. In 1980 it declined to 5.4%, but then surged to a record high of 10.7% in 1985. By 1990, the share of manufacturing in GDP stood at 8.1% but fell to 7.9% in 1992; 6.7% in 1995 and fell further to 6.3% in 1997. As at 2001 the share of manufacturing in GDP dropped to 3.4% from 6.2% in 2000. However, it increased to 4.16% in 2011 which is less than what it was in 1960. Currently, Nigeria’s manufacturing sector’s share in the Gross Domestic Product (GDP) remains minuscule (CBN, 2011). Compare that to the strong manufacturing sectors in other emerging economies, where structural change has already occurred and where millions have been lifted out of poverty as a result: manufacturing contributes 20 percent of GDP in Brazil, 34 percent in China, 30 percent in Malaysia, 35 percent in Thailand and 28 percent in Indonesia (Ogbu, 2012). The more recent experiences of the East and Southeast Asian economic transformations demonstrate that diversification into manufacturing and industrial production facilitated by what Arthur Lewis calls the “intelligent governments” are critical to poverty reduction.
SIGNIFICANCE OF MANUFACTURING INDUSTRY
Industrial activities help in solving the basic problems of unemployment, inflation, budget deficit and general economic disequilibrium. It assists to implement the policies of the government that have been directed towards the improvement of local production. It will reduce the continued pressure on balance of payment in spite of the various policy measures taken so far to address the situation.
The service industries (More formally termed: 'tertiary sector of industry' by economists) involve the provision of services to businesses as well as final consumers. Such, therefore, include accounting, tradesmanship (like mechanic or plumber services), computer services, restaurants, tourism, etc. Hence, a service Industry is one where no goods are produced whereas primary industries are those that extract minerals, oil etc. from the ground and secondary industries are those that manufacture products, including builders, but not remodeling contractors.