Nigeria's plan to boost manufacturing to 15 percent of GDP by 2030 and 25 percent by 2035 faces serious headwinds, according to a new report by the Alliance for Economic Research and Ethics (AERE) LTD/GTE. The industrial ambitions could crumble unless the government urgently fixes implementation gaps and supports small businesses, the study warns.
Dele Kelvin Oye, chairman of the Alliance, authored the report titled "The Gap: Nigeria's Industrial Policy 2025 vs. The Lived Reality of SMEs." He cautioned that while the Nigeria Industrial Policy 2025 (NIP2025) looks solid on paper, it risks failure without serious action on the ground.
The findings paint a grim picture for micro, small and medium enterprises (MSMEs). Eight million of them closed between January 2023 and June 2024, wiping out nearly 20 percent of Nigeria's estimated 40 million small businesses.
Oye said the policy cannot succeed if entrepreneurs continue shutting down operations at such alarming rates despite repeated government interventions. "A profound chasm exists between policy parchment and market pavement," he stated, adding that the NIP2025 reads like a "distant, perhaps unattainable, promise" to struggling business owners.
MSMEs contribute 46.32 percent to GDP and account for 87.9 percent of national employment, making them critical to the economy's backbone. Yet the sector faces what amounts to a survival crisis, according to the report.
Research cited in the study shows that as many as 95 percent of Nigerian SMEs fail within their first five years. Oye described this trend as an existential threat to the country's productive base.
"The lived reality is that millions of entrepreneurs are struggling to keep their businesses alive despite ambitious policy promises," the report noted. Oye attributed the collapses to persistent inflation, high interest rates, currency depreciation, rising energy costs and limited access to affordable finance.
The policy correctly identifies MSMEs as the economy's foundation and seeks to position Nigeria as Africa's leading industrial hub through increased manufacturing output, export diversification and job creation. However, implementation gaps threaten these goals.
Persistent constraints continue ravaging small businesses, according to Oye. Limited access to affordable finance, high energy costs, inflation and weak policy execution remain stubborn obstacles to survival.
Although the government has pledged single-digit loans and various incentives under the industrial policy framework, the report suggests these measures haven't reached entrepreneurs effectively. Oye warned that without radical implementation discipline, the NIP2025 risks becoming another well-intentioned document that fails to reach the shop floor.
