Learning from backward integration backed by clear policies
One of the clearest indicators of Nigeria’s troubled industrial policy landscape is the repeated cycle of well-intentioned, poorly executed initiatives that die just before they take root. A textbook case is the cassava flour inclusion policy, introduced under President Olusegun Obasanjo, aimed at mandating flour millers to include 10 percent cassava in bread.
Designed to promote local agricultural value addition, reduce wheat import bills, and create rural jobs, the policy was enthusiastically launched, only to be reversed under President Umaru Musa Yar’Adua. It reappeared under President Goodluck Jonathan with fresh funding and energy but was again quietly shelved under President Muhammadu Buhari.
Today, the policy is dead. The factories set up to support it, equipment installed, staff trained, and capital deployed are mostly idle or shut down. Billions of naira wasted. And worse still, Nigeria continues to import wheat massively, spending $2.59 billion on wheat imports in 2024 alone, according to the National Bureau of Statistics (NBS).
This is illustrative of a deeper problem: Nigeria’s industrial growth is routinely sabotaged by policy inconsistencies, weak institutional coordination, and misplaced government involvement. Unlike cassava bread, the cement sector tells a more optimistic story, a rare example of successful backward integration backed by clear policies and private capital.
Prior to reforms in 2006, Nigeria was the third-largest importer of cement and clinker globally. Domestic production met barely 25 percent of demand, leading to high prices, supply gaps, and stalled infrastructure projects. In response, the Federal Government introduced the Backward Integration Policy (BIP) for cement, raised import tariffs, and banned certain categories of cement imports. More importantly, it provided a stable regulatory framework and incentives that encouraged private sector players, notably Dangote Cement and BUA, to invest massively.
The outcome has been transformative. By 2024, local cement production capacity had reached over 50 million metric tonnes yearly, making Nigeria not only self-sufficient but also a net exporter to West Africa. Price instability remains a concern due to energy and logistics costs, but the industrial base is secure.
According to Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise (CPPE), cement thrived because private capital dominated the entire value chain. “The government created a clear, predictable policy environment and then allowed private investors to drive the process. That is what made the difference,” he said.
Why has this model not been replicated across other sectors?
In the food and beverage industry, especially with cassava, milk, and dairy, similar policies failed to gain traction. Attempts to localise milk production failed as multinational dairy companies struggled to establish supply chains with local farmers. In many cases, unclear regulations, weak infrastructure, and the absence of a long-term policy outlook made local sourcing impractical.
The steel sector offers an even sadder picture. Despite decades of investment, Nigeria’s flagship plants, Ajaokuta and Delta Steel, remain moribund. Yusuf blames this on state control and mismanagement. “If those projects had been structured like cement, with private ownership, incentives, and performance benchmarks, we would have had a functioning steel sector by now,” he says.
The failure of these sectors has cascading effects. Without steel, Nigeria cannot industrialise. Without food processing, it cannot achieve food security. And without textiles, the country loses out on a labour-intensive industry that could generate millions of jobs.
The textile industry is a glaring casualty of inconsistent policy and poor infrastructure. Rampant smuggling, an influx of cheap second-hand clothing, and high energy costs have crushed local players. “Textiles are energy-intensive and foreign exchange-dependent. In an economy with erratic power supply, high gas prices, and FX scarcity, they cannot compete with imports from China or India,” Yusuf explains.
Musibau Adetunji Babatunde, Oyo State Commissioner for Budget and Economic Planning, believes the problem is rooted in poor policy targeting. “Too many policies are top-down and not tailored to the realities of smallholder farmers and small-scale manufacturers,” he says.
Babatunde suggests that targeted incentives, delivered through cooperatives and associations, can improve outcomes. “The success of cement was not just about protectionism; it was also about scale, coordination, and clear monitoring frameworks. If we had that in agriculture or manufacturing, we’d see a similar turnaround,” he notes.
He also calls for a reduction in bureaucratic hurdles for small exporters, arguing that complex certifications and regulatory bottlenecks make it nearly impossible for local producers to access foreign markets. “Government should focus on standardisation, certification support, and infrastructure, not trying to directly run the industries,” Babatunde states.
Nigeria must abandon the practice of launching flashy policies only to discard them before they mature. Industrialisation is a long game. It requires political discipline, institutional capacity, and private sector trust.
We suggest the government adopt a three-pronged approach:
Policy stability to ensure consistency in industrial policy across administrations. Create frameworks backed by legislation where possible, not just executive discretion.
Private-sector-driven growth requires the state to step back from direct involvement in manufacturing and focus on creating enabling environments through infrastructure, incentives, and clear regulation.
Targeted support and enforcement, learning from the cement model, combine protective tariffs with strong border enforcement and direct, targeted support for capable local players.
In a country battling high unemployment, food insecurity, and import dependency, industrialisation is not a luxury; it is a necessity. The cement success shows what is possible. The cassava debacle reminds us what happens when policy is driven by politics, not pragmatism.
