Technology Innovation and the Transformation of Nigeria's Manufacturing Sector

Balogun, Emmanuel Dele (2025): Technology Innovation and the Transformation of Nigeria's Manufacturing Sector.

Abstract

This article critically examines the transformative potential of technological innovation in revitalizing Nigeria’s manufacturing sector, a cornerstone of the nation’s economic diversification agenda amid declining oil revenues and persistent macroeconomic instability. Through a mixed-methods approach—combining empirical data analysis, sectoral case studies, and policy reviews—the study explores how emerging technologies such as automation, artificial intelligence (AI), blockchain, and renewable energy systems are reshaping production processes, supply chains, and market competitiveness. Despite contributing only 9.2% to GDP and operating at 56.5% capacity utilization, the sector remains pivotal to employment, contributing 11.3% of formal jobs and serving as a conduit for import substitution. The analysis identifies infrastructural deficits, particularly erratic electricity supply and logistical inefficiencies, as primary barriers to technology adoption, costing manufacturers 40% of operational expenses. However, pioneering firms like Dangote Cement, Nestlé Nigeria, and SMEs such as ReelFruit demonstrate that strategic investments in robotics, IoT-enabled predictive maintenance, and digital supply chain platforms can reduce costs by 15–30%, enhance productivity, and unlock access to regional markets under the African Continental Free Trade Area (AfCFTA). The study further highlights the critical role of policy incoherence, skill gaps, and financing constraints—such as prohibitive loan rates (18–30%)—in slowing scalability, particularly for SMEs that constitute 85% of the sector. The article argues that Nigeria’s demographic dividend—a youth population projected to reach 400 million by 2050—presents a dual challenge and opportunity: without urgent upskilling in STEM and vocational training, unemployment will escalate, but a tech-savvy workforce could drive leapfrogging into Industry 4.0. Cross-case insights reveal that renewable energy integration (e.g., solar microgrids) and cybersecurity frameworks are essential to sustainable growth, while gender-inclusive policies could expand women’s participation beyond the current 22%. Policy recommendations include establishing a $500 million Tech Innovation Fund for SMEs, harmonizing regulatory approvals through a single-window portal, and aligning the National Digital Economy Strategy with AfCFTA’s objectives. The study concludes that Nigeria’s manufacturing future hinges on a coordinated ecosystem of public-private partnerships, targeted infrastructure investments, and agile policy reforms. Failure to act risks entrenching dependency on oil imports and informal markets, while decisive action could position Nigeria as Africa’s hub for green, tech-driven industrialization by 2030.

• Item Type: MPRA Paper
• Language: English
• Keywords: Technological Innovation, Industry 4.0, Sustainable Manufacturing, AfCFTA, Economic Diversification, Nigeria
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

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