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President Tinubu’s Drive Towards a Sustainable Industrialization for Nigeria
By Dada Olusegun
President Bola Tinubu as part of his national industrial plan in his Renewed Hope manifesto promised to prioritise growing Nigeria's industrial base to provide jobs to Nigeria's expanding population. Just over 19 months in office, the President has been walking the talk thanks to the various strategic efforts currently being put in place by the administration towards increasing Nigeria's industrial capacity at both the micro and macro levels.
The Tinubu administration has so far begun the implementation of certain initiatives that are geared towards expanding the production capacity of existing manufacturing firms and also providing a friendly environment and stimulus for new ones to set up shop in Nigeria. I will outline some of these steps and policy moves below:
1. Bank Recapitalization: The CBN in March last year began a recapitalization programme in the banking sector where Nigerian banks are required to increase their minimum paid-in capital to a particular threshold depending on the type of banking licenses they hold. For commercial banks with international licenses, the minimum capital requirement is N500 billion.
This exercise, which is expected to be concluded in 2026 is geared towards creating a more robust financial framework that will contribute massively to the growth and development of the real sector by providing liquidity and credit needed for the desired development, especially in the industrial sector, which is a major driver of economic growth and job creation. The aim is that after recapitalization, many of the banks will increase the ability to take bigger risks and provide credit to new and existing manufacturers, including those operating at a small or medium scale level.
2. Nigeria Credit Guarantee Company: Closely aligned with the bank recapitalization efforts of the Tinubu administration is the anticipated creation of the Nigeria Credit Guarantee Bank announced by the President in his New Year message. The company which is expected to begin operations before the end of the second quarter of 2025 aims to derisk the financial market and provide the needed buffer for lenders to perform the intended duty from the recapitalization process without any fear of loan default or loss of capital.
The Nigeria Credit Guarantee Company is designed to be in partnership with government institutions that play a role in the industrialisation drive, such as the Bank of Industry, the Nigerian Consumer Credit Corporation (CREDICORP), the Nigerian Sovereign Investment Agency (NSIA) and the Ministry of Finance Incorporated (MOFI) as well as the private sector and multilateral institutions. This initiative will remove one of the biggest barriers that makes banks reluctant to extend credit to the manufacturing sector.
3. Multi-billion Naira Low Interest Credit for Manufacturers: President Bola Tinubu as part of efforts to provide immediate support to large enterprises including manufacturers to sustain and expand their operations announced a N75 billion Manufacturing Intervention Fund. The aim is to offer large manufacturing enterprises up to N1 billion credit at a 9% interest rate instead of the going rate in the lending market which is around 30%. The repayment period is spread over 10 years. According to the Bank of Industry, around 140 manufacturers have applied for the low-interest credit facility.
One of the significant aspects of the Intervention Fund is its revolving nature where repayments from previous beneficiaries are used to provide loans to new businesses, ensuring a continuous flow of funds and most importantly availability of cheaper financing to manufacturing companies. This is a huge incentive for industrialisation in Nigeria.
4. Consumer Credit Scheme Phase 2: Another important policy of the Tinubu administration that has had a big impact on Nigeria's march towards industrialisation is the Consumer Credit Scheme, which aims to remove structural, market and policy barriers, and accelerate access to consumer credit to 50% of all working Nigerians by 2030. The immediate implication of increased availability of credit to consumers is that demand for goods and services will increase.
The increased demand from more consumers who now have easier access to readily available credit and generous repayment terms opens tremendous opportunities for domestic industries to enjoy greater patronage. In 2024, the consumer credit scheme kicked off with federal and state civil servants as beneficiaries of the pilot phase. The testimonials were very encouraging as these Nigerians were able to purchase items that they would not have easily bought without saving for a considerable amount of time. The foundation for the next phase of the scheme was also laid by CREDICORP in 2024 and this phase has particularly massive implications for Nigeria's industrialisation drive.
For example, the recent launch of the N20 billion Consumer Credit fund for the purchase of locally-assembled automobiles is a big stimulus to local productivity. The initiative will provide Nigerians who wish to purchase locally assembled vehicles the low-interest credit to do so and pay back over a reasonable amount of time. Demand for these local vehicles will increase and force the vehicle manufacturing/assembling companies to expand. This means more market for vehicle furniture, paints, batteries, tyres and many other accessories. There is also a similar initiative involving solar kits, CNG kits, furniture and other consumer items.
5. Steel Ministry Creation: President Bola Tinubu identified the steel production industry as a major sector that will propel Nigeria to an industrialised economy because steel occupies a very central place in the industrial sector. For decades, Nigeria has been unable to break the jinx that has held back its steel industry with the Ajaokuta steel complex being the biggest indictment of our collective failure. President Bola Tinubu, who relishes challenges like this, decided to create a stand-alone Ministry for Steel to drive the steel development programme.
In September 2024, Nigeria took a major step towards solving the Ajaokuta steel puzzle with the signing of the Memorandum of Understanding (MoU) between the Federal Government and the original builders of the Ajaokuta Steel Plant, TPE and its consortium in Moscow, Russia. The procurement process for the selection of the technical audit firm has been completed, and the auditing of the entire plant is underway. This time around, the story of Ajaokuta Steel will be different.
The ministry is also working on reviving the Aluminium Smelter Company of Nigeria (ALSCON) located at Ikot Abasi, Akwa Ibom state. It is working to resolve all the issues encumbering the commencement of operations in the plant. The ministry is working with other stakeholders to tackle outstanding barriers such as gas supply to the $3.5 billion plant, which is the major issue that stopped the plant from operating more than two decades ago.
Nigeria's Industrial Future is Exciting
Apart from the deliberate efforts of the Tinubu administration that I have listed above aimed at stimulating Nigeria's industrialisation, a lot more is happening and will happen in the industrial sector. The return of Nigeria's local crude oil refining capabilities brings a lot of extra opportunities for our industrial sector especially in the petrochemical sub-sector that uses many of the refinery byproducts to manufacture secondary products.
The President through some of his ministers is also leading efforts to encourage local manufacture of many imported items such as pharmaceuticals, test kits, medical equipment etc. Value addition to our primary raw materials such as solid minerals and agricultural produce has also been an area the Tinubu administration is expending tremendous energy to achieve by wooing investors with attractive incentives. The essence is to create new industrial opportunities in Nigeria instead of exporting jobs by allowing endless exports of primary raw materials to the developed world without any form of local value addition.
When you put all these aspects of Tinubu's industrialisation drive in perspective, it becomes obvious that the President is laying the foundation for a sustainable industrial boom in Nigeria through a combination of financial restructuring to support the industrial sector, execution of stalled monumental industrial projects, stimulation of increased local demands for industrial products through consumer credit as well as provision of incentives to encourage local manufacturing of items and value addition to primary raw materials. This multi-layered solution mix is basically how we will sustainably expand our industrial base. That is the Renewed Hope industrialisation agenda!
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