Senior Trade Consultant (West Africa), VDMA, Kayode Jegede, speaks to ARINZE NWAFOR about how urgently Nigeria needs to propel manufacturing with processed raw materials to strengthen its economy
How well is Nigeria positioned in the global trade economy?
Nigeria needs to improve its current position in global trade. We don’t manufacture sufficiently. Based on recent data, manufacturing contributed only 9.62 per cent of the country’s GDP. The best performers in the world, including China, have manufacturing contributing approximately 30 per cent to their GDP. South Africa is the best performer in Africa, with manufacturing contributing about 13 per cent. There’s a lot of room for improvement. Nigeria was doing phenomenally well in manufacturing in the past, before things started going down. We have an opportunity to return to that position.
On Nigeria’s place in global trade, we have to ask, what are we exporting and how much? We mainly export raw materials as they are not processed internally. We are shortchanging ourselves by not processing these raw materials. Manufacturing is the best job creator, and we will create a lot of jobs for Nigerians once we begin to process raw materials and manufacture.
Another reason to ramp up manufacturing is that the Nigerian local market is big and consumes a lot of imports. Increased manufacturing will help Nigeria export more to gain foreign currency, as we can see from the example of Dangote refinery. Once that refinery started producing, our need to import a lot of petroleum and other petrochemical products reduced and saved the country millions of dollars.
Can Nigeria compete with China and other heavily industrialised countries, or focus more on services and other sectors?
Nigeria cannot leapfrog manufacturing, not at this stage of our economic growth. We need a manufacturing base. Look at all the basic things we use, our shoes, socks, shirts, my glasses, our phones, and this book; they are all made outside Nigeria. That is not right. All the basic things a country uses internally should be made in that country.
There is room for importing some strategic things, but most of the basic things we use in Nigeria should be made in Nigeria. We cannot give up. We can compete against them. Many companies have proven they manufacture better products in Nigeria than imported ones, and their products are more affordable.
Many manufacturers are hiding, and I’ve always wondered why. I hypothesise that they hide from the government because they are regularly harassed to pay taxes by both the government and non-governmental agencies. Many local manufacturers are quietly doing their thing, even without a signboard.
How would Nigeria’s championing of AfCFTA and participation in BRICS help it navigate an increasingly hostile global trade scene?
The African Continental Free Trade Area is brilliant. Why do I say so? Africa has a tremendous amount of mineral resources, but we are fragmented into small countries. We do not have the scale of China or India as individual countries. But if we come together as one and goods can move freely, then we have the scale, and we can begin to compete.
We can import the raw materials we don’t have in Nigeria from another country, say Congo or Kenya. And the ones they don’t have, we can send. They can process it or set up a factory here to process and ship it out. It is a great initiative that opens up the market. I love that Nigeria was quick to domicile the law earlier this year. It can only bring good things.
On being a partner member of BRICS while dealing with the United States tariffs, I think it is a blessing in disguise. The tariffs will hurt in the short term. It will hurt all of us. But it will also make us look outside of the US to sell and trade with ourselves in Africa. The tariffs have the potential to compel Africa to make the AfCFTA work.
How can Nigeria’s non-oil trade, which as of Q1 2025 captures 15.38 per cent of total exports, scale even higher?
Nigeria’s business environment poses a challenge to exporters and manufacturers. Manufacturers face enormous challenges at the port just to get their goods shipped. We need to minimise bureaucracy and eliminate bottlenecks for ease of export.
When we trace it back to the source of where the goods are coming from, we’d look at the roads, the transportation of goods from the hinterland to the port. We know the state of roads is enough to discourage anybody. That’s why I praise the resilience of Nigerian entrepreneurs. We are one of the best in the world. We are a very hardened people. If you can survive as an entrepreneur in Nigeria, you can survive anywhere in the world. That’s the truth.
What would it take for the manufacturing sector to turn the corner, as exports of manufactured goods, growing year-on-year by 9.58 per cent in Q1 2025, appear to indicate the sector’s resilience?
You need entrepreneurs for manufacturing to work in any country, people who do business. Nigeria is blessed with an abundance of entrepreneurs. We are among the most entrepreneurial people, and that’s a good thing. However, our businesses remain small if it’s the only entrepreneurship that is there.
Other factors include financing. A manufacturer who needs to scale up needs financing. You need access to bank loans to run your business. Low-interest bank loans. Many manufacturers complain that they don’t have access to financing. They lament that the government-facilitated financing schemes, which promise to create 0% or single-digit interest rates, fail because the government would transfer the initiative to banks to implement, and then when it gets to the manufacturer, interest is high.
Thirdly, Nigeria needs leadership. We need it at all levels, especially at the highest level of government. Leadership by the government in the right direction would make manufacturing our national focus, just like we’ve seen other countries do – China, India. The government led the way and made it its focus. And removed all barriers for manufacturers. We need to do the same. A colleague called it strategic coordination.
On the lower levels of leadership, you meet the organised private sector, like the Manufacturers Association of Nigeria, and all the chambers of commerce. They are advocacy groups. They are lobby groups for their members. They advise governments on what to do based on what their members need. So yes, the leadership must also come from there. And they are trying. I always give praise where praise is due.
MAN, and all the chambers of commerce, are really trying. But there are still some bits they can do. For example, one thing I haven’t seen in Nigeria much is companies just coming around to discuss technical issues. That is, let’s say members of an industry or companies that belong to the same industry have frequent sessions where they sit down and say, Okay, what is the latest technology in our field? What do you see? What do you see? I don’t see that happening yet. But it happens a lot in other developed countries where VDMA has offices.
VDMA even facilitates some of these meetings. We bring industry members together and say, Just talk. I notice that we are not doing this in Nigeria because of the factor of trust. We are a low-trust environment so everybody is trying to hide. But it’s a growth thing. We’ll come to a stage where we’ll stop hiding. I believe it will happen.
Skills must be in place for manufacturing to really grow. We do not have the skills for manufacturing in Nigeria. We don’t have enough.
Does this have anything to do with education?
Yes, it starts from our educational system. We’ve got it wrong. Seriously, we’ve got our educational system wrong. The educational system of any country should be developed for the economy. If you look at our educational system today, we attend primary school, secondary school, and then everybody wants to go to university. Everybody.
I’ve met so many university graduates in Nigeria. I’ll discuss with them and observe that this person should not have bothered with going to university. I’m not looking down on the person, but I see in the person the potential to have been something else. A carpenter, a mechanic, a photographer, a vocational skill, something you do with your hands. That is what our economy needs more than university graduates now.
But it does not appear like the government at all levels is emphasising this. They talk about it, but they don’t do it. They have to do it. Vocational education is extremely important to manufacturing.
Most of these manufacturers are employing highly skilled candidates. They don’t need university graduates. Even the ones that take university graduates will first train them in the vocational skills that they need. These are skills that anybody, even after leaving secondary school, can learn in six months or one year.
Our educational system should be restructured so that we identify where people’s talents and interests are, and then we encourage these people to go that way. This is the way they do it in Germany. Then we set up the vocational schools to be properly equipped. We used to have them in the ‘60s and ‘70s. I’m old enough to remember, even though I didn’t attend, but technical schools were strong. It was a legacy left over by the British, but the early governments built on it.
