CHAPTER ONE

INTRODUCTION

1.0 BACKGROUND OF THE STUDY

Industrialization is regarded as a central object of economic

policy in most developing economies. They see industrialization and

agriculture as an integral part of development and structural

change. Some economic analyst are of the view that industries play

a vital role in the economic growth and development of any country.

In this research work effort is made to analyze the impact of the

industrial sector to the economic development of Nigeria.

Generally the industrial revolution which took place in Britain

between the late 18th and 19th centuries has gotten much to do with

the present set back on industrial development led to the factory

process that metamorphosised into industrial production. Thus

history recorded that the industrial sector performance in Nigeria’s

economic growth is as old as the nation itself. It dates back to the

amalgamation of the southern parts of the country in 1914 to for

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the geographical land mass called Nigeria. By a representative of

the colonial administration of Britain Lord Fr. Fredrick Lugard.

As soon as independence was over the government of Nigeria

embarked on import substitution as an industrial strategy in order

to reverse the problem of deficit balance of trade and fasten

industrialization among other reasons.

Right from the first national development plan (1962-1968) to

the fourth national development plan (1981-1985) rapid

industrialization received priority in Nigeria’s development

objectives. The government sector for instance the allocation of

16.2 percent of the budget plan to the manufacturing sector during

the third national development plan (1975-1980) was the highest.

The industrial policies and strategies of development were adoption

of import substitution strategy expansion of indigenous equity

participation in foreign owned enterprises provision of integration

linkages and diversification of industrial increased domestic

resources content of industrial product and provision of financial

and manpower resources to promote research and adoption of

technology to encourage the small and medium scale industries and

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public sector participation and control of some large industrial

products such as iron.

To withstand the rising problems of the sector and economy in

general Nigeria embarked on structural adjustment programme

(SAP) in 1986 on the assumption that structural adjustment

programme (SAP) would corrects these problems. It has important

implication on both the government and industry. It has brought

government re-appraised of the regulatory environment the

structure of protection for local industries and the package of

incentives available. For the private sector and industrialist in

particular SAP presented a new challenge which reported a more

serious effort to control costs increase production efficiency and

remain competitive.

In the spirit of SAP the second tier foreign exchange market

(SFEM) was introduced in 1987 to allow market forces determine

the foreign exchange rate remove price distortions and thereby

effect a more efficient allocation of resources.

Because of inability of the existing policies to live up to

expectation government therefore in 1988 adopted a new approach

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to industrial development which gave prominence to the role of the

private sector. To give effect to this management approach

government in August 1988 established the national committee on

industrial development (NCID). The strategic management of

industrial development (SMID) or industrial master plan (IMP) is

predicted on the need to organize a network of sectors (referred to

as strategic consultative groups) around on industrial activities with

the aim of having a comprehensive and perception view of the

investment problems in particular line of industrial activity. The

(IMP) seeks to minimize the problems of policy and programme

consistency in the development of the nations industries.

A number of fiscal and monetary policies together with

institutional reform measures have been undertaken by the

Olusegun Obasanjo administration since transition in May 1999.

With these measures it is envisioned that Nigeria will be

transformed into a major industrialized nation and an economic

power.

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1.1 STATEMENT OF THE PROBLEM

The industrial sector is known to be the strength of the value-

added processes in many economies. Nigeria is wanting to

industrialize must encounter some problems which are militating

against industrialization for the purpose of this study it is pertinent

to survey those problems which are forming obstacles to

industrialization.

Industrial sector encountered the problem of low price

elasticity of export and lack of comparative advantage. This means

that Nigeria share of foreign exchange market cannot appreciate

despite the numerous incentives granted to the industrial sector.

The absence of an indigenous entrepreneurship class couple

with other problems of multinational corporation affect the

structure and influence the nature of utilization of scientific and

technological labour for national development.

Realizing that industrialization can indeed have some adverse

effect on the economic growth and development of the country one

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will logically ask low effective are the industrialization policies in

Nigeria?

1.2 OBJECTIVES OF THE STUDY

It has been observed that most industries in Nigeria have not

realized their economic development goal even with the existence of

manufacturing industries within the economy. Therefore this work

researches the following objectives.

i. To determine the role of manufacturing industry in the

economic development of Nigerian economy.

ii. To examine ways in which industrial sector in Nigeria can be

made to play a better role towards high productivity for

economic growth of Nigeria.

1.3 HYPOTHESES OF THE STUDY

The following hypotheses are tested on this study:

H0: The industrial sector contribution has no significant impact to

economic development of Nigeria.

Hi: The industrial sector contribution has significant impact to the

economic development of Nigeria.

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1.4 SIGNIFICANT OF THE STUDY

The significant of this study lies in the fact that it will expose

the extent to which industrialization has contributed to economic

development of Nigeria. It will highlight some obstacles hindering

increase in industrialization and industrial output in Nigeria.

This work will be relevant to entrepreneurs and government by

directing them on the easiest means of embarking on industrial

development plan. The relevance of this work also lies in the fact

that it adds to the already existing literature on industrial output.

Furthermore this research work will assist students of

economics government and real potential industrialist investors

and other related coursed. Other researchers will see this work

veritable material in their field of study .

Finally since no knowledge is a waste readers of this work

will find it interesting to know that high industrialization is the

shortest route to economic development.

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1.5 SCOPE OF THE STUDY

This research work deals on the impact of industrialization on

Nigeria’s economic development. The date used is a secondary data

which was obtained from the publication of the central bank of

Nigeria statistical bulletin and the amial report of accounts. The

analytical tools employed on this research include t-test and

regression analysis.

1.6 LIMITATIONS OF THE STUDY

A study of this nature cannot be done without some problems

and as such it was constrained by many factors namely:

TIME: While embarking on this detailed research work the

researcher was having lectures preparing for examinations

engaging in such activities and domestic work as well. So time was

not enough for the researcher to perfect the work.

FINANCE: Financial inadequacy was the major limitation of this

work. The researcher was financially dependent as a student. The

need for materials trips and logistics needed for this research was

not adequately provided.

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DATA: The controversial nature of the Nigeria data delayed this

work. It took the researcher a lot of time before the harmonization

of the data used in this research work.

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