CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Prolonged economic
recession occasioned by the collapse of the world oil market from the early
1980s and the attendant sharp fall in foreign exchange earnings have adversely
affected economic growth and development in Nigeria. Other problems of the
economy include excessive dependence on imports for both consumption and
capital goods, dysfunctional social and economic infrastructure, unprecedented
fall in capacity utilization rate in industry and neglect of the agricultural
sector, among others (Ku et al, 2010; Adesina, 1992). These have resulted in
fallen incomes and devalued standards of living amongst Nigerians.
Although the structural
adjustment programme (SAP) was introduced in 1986 to address these problems, no
notable improvement took place. From a middle income nation in the 1970s and
early 1980s, Nigeria is today among the 30 poorest nations in the world.
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.
The path to economic
recovery and growth may require increasing production inputs - land, labour,
capital and technology - and or increasing their productivity (Kayode and
Teriba, 1977). 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 productivity of the Nigerian
manufacturing sector. This will be useful in ascertaining the relative
efficiency of firms, sub-sectors and sectors. A knowledge of the relative
efficiency of industries in relation to economic growth and development could
aid government in planning its programmes and policies, especially in deciding
on which industries should be accorded priority. In the light of the foregoing,
there cannot be a more 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). The near total neglect of
agriculture has denied many manufacturers and industries their primary source
of raw materials. The absence of locally sourced inputs has resulted in low
industrialization.
Some of the
constraints faced in this sector include:
•
High interest
rates
•
Unpredictable government
policies
•
Non-implementation
of existing policies
•
Lack of
effective regulatory agencies
•
Infrastructural inadequacies
•
Dumpingof cheap products
•
Unfair
tariff regime
•
Low
patronage
It is in the
light of the foregoing that this study seeks to evaluate the role of the
manufacturing
sector in the Nigerian economy.
The
broad objective of this study is to appraise critically, the role of the
manufacturing sector in Nigerian economy.
The specific objectives
of the study include:
1. to
investigate the impact of the manufacturing sector on the economic growth and
development of Nigeria.
2. to
assess the level of productivity in the Nigerian manufacturing sector.
3. to
identify the major constraints confronting the Nigerian Manufacturing sector.
4. to
find out the various policy measures available to the government that can be
used to redress the persistent decline in the manufacturing production.
Note:
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