Execution key to Nigeria’s industrial policy success, says former UNIDO chief

Nigeria’s new industrial policy, introduced in February 2026, aims to transform the economy from raw commodity exports towards higher-value manufacturing. However, the success of this policy will be determined not by its design on paper but by its effective implementation, including the establishment of new factories and increased domestic value creation.

Kandeh Yumkella, former director-general of the United Nations Industrial Development Organisation, addressed this critical perspective at the 6th Adeola Odutola Lecture hosted by the Manufacturers Association of Nigeria (MAN) in Lagos. He stressed the importance of concrete action, urging Nigerian government ministries responsible for industry and finance to track measurable outcomes such as factory openings, expansion of existing manufacturing firms, mobilization of investment, and overall domestic value addition.

Government partnership with manufacturers is vital

Yumkella highlighted that government involvement should go beyond policy creation to become a supportive partner to manufacturers. He drew on global examples where government-led public capital investment and policy adjustments directly foster industrial growth. For instance, Western nations like the United States recently reversed previous skepticism towards industrial policies by enacting legislation such as the Chips and Science Act and the Inflation Reduction Act to boost domestic production in critical technology sectors.

He also noted that Asian economies have long employed active industrial policies, leveraging subsidies and infrastructural support to enhance competitiveness. Nigerian manufacturers face significant cost challenges, notably energy and water expenses that undermine competitiveness against countries like India and Pakistan, where electricity subsidies help maintain lower production costs.

Industrial achievements and areas of opportunity

There are signs of progress supporting Yumkella’s call for execution. The Dangote Refinery, once doubted internationally, is reportedly supplying over 70% of Nigeria’s petrol needs while running above expected capacity. Similarly, fertilizer production is growing, positioning Nigeria to become a leading fertilizer producer in Africa, leveraging resources like Congo’s phosphate and potassium deposits.

The pharmaceutical sector reflects consistent policy application, as local manufacturing rises and imported finished drug units declined substantially by 2025. Future goals include developing local production of active pharmaceutical ingredients and expanding export capacity.

In the automotive sector, despite having one of Africa’s largest markets and assembly infrastructure, value chain development remains limited. Experimentation with electric motorcycles, battery swapping, and charging infrastructure points to opportunities where Nigeria’s solid minerals policy, particularly a requirement for at least 30% local lithium processing, is already driving industrial development.

Challenges ahead: energy and infrastructure

Despite positive developments, Nigeria’s manufacturing sector continues to struggle with severe energy deficits. The national grid supplies only about a quarter of the megawatts required, forcing manufacturers to rely heavily on costly self-generated power, which inflates production costs to 35–40%, compared with 5–15% in countries such as India and Vietnam.

Yumkella emphasized that without resolving Nigeria’s energy challenges, other industrial progress risks faltering. He cited vibrant SME clusters in Aba and Nnewi as examples of resilience and enterprise, signaling potential for greater manufacturing dynamism if infrastructural bottlenecks are addressed.

Implications for Nigeria’s economy

As the largest economy in West Africa, accounting for roughly 65–70% of ECOWAS GDP, Nigeria’s industrial policy execution will significantly affect regional economic integration and market development under the African Continental Free Trade Area (AfCFTA). Successful industrialization leading to job creation, domestic wealth generation, and export growth could strengthen Nigeria’s role as an economic hub in Africa.

With foreign direct investment inflows doubling to $4 billion in 2025, particularly in petrochemicals, the country shows investor interest that could scale further with improved policy delivery and infrastructure. The continued monitoring of industrial outcomes, coupled with strategic government support, will be vital to translating Nigeria’s industrial policy into sustained economic transformation.