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INTRODUCTION TO THE STUDY
1.0 Background of the study
Industrialization has been regarded as a veritable channel of achieving lofty and desirable goals of improved technology and improved quality of lives of the citizens of the country. Countries develop their industrial sectors for many reasons: (i) industries have more backward and forward leakages to the other sectors of an economy; (ii) they exhibit increasing returns to scale; and (iii) they have the ability to diffuse technology in the economy wider than the primary sector. According to Bolaky (2011), industries are very essential in a developing country like Nigeria because the marginal revenue products of labour in the industrial sector are higher than the marginal revenue product of labour in the agricultural sector. Based on this, the releasing of labour force from agricultural sector to the industrial sector increases the marginal product of labour in the agricultural sector and increases the overall revenue and output of the society and hence contributes to economic-growth. Therefore, industrialization is an ideal policy option for sustainable economic growth in Nigeria and it is what the present regime needs to achieve its transformation agenda.
Based on the above, Nigeria has designed policies to attract manufacturing and industrial activities during the colonial and postcolonial periods. In the colonial era, the focus was to extract raw materials from Nigeria to foreign based industries. Like the rest of African countries, the colonial government in Nigeria was interested in extracting raw materials for its industries at home. For this reason no conscious efforts was made to industrialize Nigeria. It used to be argued that countries should specialize in areas of production that they are best suited. Between
the periphery and the centre, the centre had more advantage in industrial output and the periphery in raw materials ( Jhingan, 2008).
In the post-Independence Nigeria, the indigenous government that emerged was very ambitious not only to industrialize, but also to ensure indigenous participation. This led to the emergence of Indigenization policy along with Import substitution strategies. Nigeria had practiced this from 1960s to the early 1980s. It was noticed that the twin policies of import substitution and indigenization could not yield the expected industrialization in Nigeria. Two main problems were encountered here.
The oil boom of the 1970s made Nigeria neglected its agricultural and light manufacturing bases in favour of an unhealthy dependence on crude oil. In 2000, oil and gas export accounted for more than 98% of export earning and about 83% of federal government revenue. New oil wealth, the concurrent decline of other economic model fuelled massive migration to the cities and led to increasingly wide spread poverty especially in rural areas. A collapse of basic infrastructures and social services since the early 1980s accompanied this trend, (CIA, 2010).
One, the Nigerian citizens to whom import substitution and indigenization policies favour lack the financial capacity, the technical knowhow, the entrepreneurial ability and the managerial acumen. Second, import substitution necessarily entails inefficiency of local industries because they are not established to face foreign completion and so were over protected. To industrialize, it became necessary to abandon these twin policies.
In 1985, Nigeria adopted the Structural Adjustment Programme (SAP) that was supposed to restructure the Nigerian economy, encourage both local and international investors to invest in Nigerian economy. The implementations of the policy, rather than improving the Nigerian
economic performance, worsen the situation, leading to under capacity utilization of the economy.
SAP was finally abandoned in the 1990s for private sector to take the leading role in the manufacturing and the industrial sectors of the economy. Government has agreed to take up boosting local technology expertise and promoting small scale industries. It is not yet clear how government intends to improve local technology and encourage small and medium scale industries for stimulating industrial growth in Nigeria. By 2000, Nigeria's per capita income had plunged to about one quarter of its mid 1970s high, below the level at independence. Along with the endemic malaise of Nigeria's non-oil sector, the economy continues to witness massive growth of informal sector‟ economic activities estimated by some to be as high as 75% of the total economy. The U.S United State remains Nigeria's customer for crude oil accounting for 40% of the country's total oil export, Nigeria provides about 10% of overall U.S oil import and ranks as the fifth-largest source for U.S imported oil and ranked 44th worldwide and third in Africa in factor output. (Adeolu Banyawale, 1997)
Industrialization is obviously the replacement of hand tools by machine and power tools is the sine qua non of an industrialized society. But industrialization a) so involves vast economic and social changes, e.g., a tendency toward urbanization, a growing body of wage earners, increased technical and advanced education.
By studying these and other concomitants, one can detect the sign of incipient industrialization in Nigeria.
Historically, the pattern of settlement in Nigeria has been, for the most part, one of farmers living in towns and cities, traveling many muse a day to tend their fields. Today the forces of urbanization are serving to accentuate this existing tendency.
There are two large sources of existing and potential wage eamel'8: peasant farmers who either begin to produce a surplus for sale, or who go to work for another farmer, and the ever increasing number of school graduates.
Most of these young, literate Nigerians feel that peasant farming offers no future, and yet the majority of them have not been trained for any specific job. Although all young developing economies suffer from the problem of underemployment and unemployment, the situation has been aggravated in Nigeria by the increased pace of basic education. Advanced education is still somewhat of a novelty, and tends to become a status symbol rather than a force for economic progress. The Nigerian economy simply cannot at present absorb the existing labor supply. In spite of the large amount of labor available, Nigeria greatly handicapped by the paucity of skilled labor. This is probably her greatest obstacle to more rapid development. Managerial skills are in short Supply. Very few Nigerian businessmen are willing to launch a manufacturing venture at their own risk. This is largely due to limited capital and to the lack of an industrial tradition. Although ideally, government role in economic development should be, for the most part, one of help and encouragement to the private sector of the economy.
How or why some agrarian societies have evolved into industrial states is not always fully understood. What is certainly known, though, is that the changes that took place in Britain during the Industrial Revolution of the late 18th and 19th centuries provided a prototype for the early industrializing nations of western Europe and North America. Along with its technological components (e.g., the mechanization of labour and the reliance upon inanimate sources of energy), the process of industrialization entailed profound social developments. The freeing of the laborer from feudal and customary obligations created a free market in labour, with a pivotal
role for a specific social type, the entrepreneur. Cities drew large numbers of people off the land, massing workers in the new industrial towns and factories.
Later industrializers attempted to manipulate some of these elements. The Soviet Union, for instance, industrialized largely on the basis of forced labour and eliminated the entrepreneur, while in Japan strong state involvement stimulated and sustained the entrepreneur's role. Other states, notably Denmark and New Zealand, industrialized primarily by commercializing and mechanizing agriculture.
Although urban-industrial life offers unprecedented opportunities for individual mobility and personal freedom, it can exact high social and psychological tolls. Such various observers as Karl Marx and Émile Durkheim cited the “alienation” and “anomie” of individual workers faced by seemingly meaningless tasks and rapidly altering goals. The fragmentation of the extended family and community tended to isolate individuals and to countervail traditional values. By the very mechanism of growth, industrialism appears to create a new strain of poverty, whose victims for a variety of reasons are unable to compete according to the rules of the industrial order. In the major industrialized nations of the late 20th century, such developments as automated technology, an expanding service sector, and increasing suburbanization signaled what some observers called the emergence of a postindustrial society.
1.1 Statement of The Problem
The malfunctioning of industrial sector in a country is widely seen as a major handicap improving a country's economy and power pushing many governments to encourage or enforce industrialization (Wikipedia, free encyclopedia). One of the problems bedeviling the Nigeria
economy is that of output from its industrial sector of the economy. Admittedly, the decay in the manufacturing sector is the result of diverse factors that conspire to render many industries comatose (ill). The study is therefore necessary to enable a thorough investigation of the problems of the industrial sector especially that of manufacturing industries and various government agencies set up to provide credit facilities to the industrial sector to ensure continual growth of this sector for rapid economic development of this nation.
That industrialization of a truth is the catalyst of economic prosperity for many na
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