In what could be one of the most consequential economic decisions of this administration, the Federal Government of Nigeria has unveiled a new industrial policy aimed at reviving dormant factories, stimulating manufacturing, and repositioning the country as a competitive industrial hub. The policy marks a shift from fragmented interventions to a structured strategy under President Bola Tinubu’s Renewed Hope agenda, prioritising productive industry as a central driver of economic transformation.
At its core, the policy addresses Nigeria’s long-standing structural weakness: low productive capacity coupled with persistent reliance on imports. Despite hosting some of Africa’s largest industrial assets, the country remains a net importer of manufactured goods. The government’s plan aims to reverse this trend by integrating Nigerian firms into regional and global value chains while promoting domestic production.
A critical pillar of the strategy is the recapitalisation of the Bank of Industry (BOI) to N3 trillion, with sector-specific intervention funds raised to the same level. This move is intended to bridge the chronic financing gap facing manufacturers. High interest rates, short loan tenors, and risk-averse commercial banks have long hampered industrial expansion. By strengthening the BOI, the government seeks to provide long-term, low-interest credit to manufacturers and MSMEs, encouraging capacity expansion and job creation.
However, voices from the business community indicate that financing, while necessary, is not sufficient. Oluwatosin Adepoju, CEO of Promaket Links and Services, highlights the structural challenges that undermine the effectiveness of government loans. He notes that “even before the federal government allowed people access to loans, manufacturers and business owners had been taking loans from banks. The issue is not the availability of funds; it is the accessibility and proper targeting of those funds.” Adepoju argues that relying on commercial banks to distribute government loans introduces delays and potential diversion of funds for profit-making activities by banks. He suggests that a dedicated government body within the central banking system could administer loans directly to SMEs, reducing bureaucratic friction and improving the probability that real producers benefit.
Beyond financing, manufacturers face persistent structural obstacles, including high electricity costs, multiple taxes, and foreign exchange challenges. Adepoju stresses that “the federal government giving loans does not reduce electricity tariffs, VAT, or other costs. Manufacturers still pay for fuel, transportation, logistics, and raw materials. These expenses erode profitability and keep production costs high.” In practice, VAT and other levies are applied at multiple points, from raw materials to final products, compounding the financial burden on manufacturers and consumers alike.
This reality underscores a fundamental limitation of the current policy. While the BOI recapitalisation provides additional liquidity, it does not address the cost structure of manufacturing. Adepoju explains: “Even if a manufacturer receives a loan, they still spend the bulk of it on electricity, raw materials, and taxes. Loans alone cannot make products cheaper or improve competitiveness. Subsidies or cost reductions in critical inputs would have a far greater impact on production efficiency and sustainability.”
Consumers’ perspectives align with this concern but highlight the potential for demand-driven change. Nigerian buyers indicate willingness to purchase locally produced goods if quality, durability, and service standards meet or exceed imported alternatives. Oluchi Hilda notes that “people prefer imported products because of quality, not just price. If local products match the quality, we will adjust to the price.” Similarly, Ayomide Adigun emphasises that consistent quality and durability are the key factors that would encourage loyalty to Nigerian-made products. This suggests that manufacturing policy must address both production efficiency and product standards to generate sustainable demand.
The policy also includes non-financial interventions: harmonisation of tax systems, establishment of industrial clusters, and skills development programs. Industrial clusters aim to reduce unit costs by sharing infrastructure and energy resources. Skills development seeks to bridge chronic gaps in technical capacity, ensuring that human capital supports industrial competitiveness. Yet, without addressing fundamental cost drivers such as energy and material prices, these measures may only partially mitigate the challenges manufacturers face.
Nigeria’s industrial policy represents a strategic pivot towards a more productive economic model, but its success will depend on delivery rather than declaration. Loans, while important, cannot resolve structural inefficiencies. Reducing input costs, improving power supply, simplifying tax regimes, and ensuring high-quality outputs are essential complements to financial interventions. Stakeholders agree that without these measures, industrial revival risks being a financial exercise rather than a transformation of productive capacity.
In conclusion, the Nigerian government’s industrial reset signals intent, coordination, and ambition. The recapitalisation of the BOI and the establishment of oversight mechanisms provide a framework for enhanced financing and accountability. Yet, as Adepoju warns, “giving out loans cannot solve manufacturers’ problems if electricity, raw material, and tax burdens remain high.” For the policy to succeed, it must integrate financial support with structural reforms that reduce production costs, improve quality, and encourage consumer trust in locally manufactured goods. Only then can dormant factories become engines of growth, and Nigeria’s industrial potential be fully realised.
