Nigeria’s manufacturing jobs growth outpaces productivity in 2 decades
Manufacturing Sector Faces Employment-Productivity Paradox in Nigeria
By Yinka Kolawole
Nigeria’s manufacturing sector is experiencing a paradox: an increase in employment that fails to deliver corresponding gains in productivity. This trend reveals underlying structural weaknesses within the country’s industrial framework.
Over the past two decades, employment in manufacturing has seen a slight rise, from approximately 9% in the early 2000s to about 14% in 2023, according to data from the United Nations Industrial Development Organization (UNIDO). Despite this growth in factory and agro-processing positions, productivity levels, measured by value added per worker, continue to lag behind those of comparable economies.
Statistics indicate that Manufacturing Value Added (MVA) per worker has demonstrated volatility throughout this period. After reaching a peak of around $678 in the late 1990s, this figure dropped sharply to $162 in 2000. While there was a recovery, with productivity rising to $661 in 2014, it has since declined again to roughly $224 by 2024. This suggests that although more Nigerians are finding jobs in manufacturing, each worker is generating substantially less value compared to counterparts in more productive industrial settings.
Industry analysts attribute this trend to several ongoing challenges, including low technology adoption, inadequate infrastructure, high energy costs, limited access to finance, and weak integration within value chains. Despite growing employment numbers, these factors continue to hinder productivity rates.
In contrast, industrializing economies in Asia and other emerging markets have experienced job growth alongside significant productivity improvements. For instance, India’s MVA per worker reached $1,811 in 2023, while Indonesia’s stood at $804. South Africa, one of Africa’s most developed industrial economies, reported $1,805—figures far exceeding Nigeria’s and achieved in conjunction with expanding manufacturing employment.
Most of Nigeria’s recent job growth in manufacturing has been observed in micro and small enterprises, which face obstacles such as limited access to modern machinery, unstable electricity, high energy costs, and insufficient financing options. Many of these businesses operate in low-technology, labor-intensive subsectors including food processing, textiles, and furniture. Although they provide employment opportunities, these companies often lack the resources and technical support necessary to enhance productivity or scale production.
Economists caution that without a focus on productivity growth, the increase in manufacturing jobs alone will not suffice to drive industrial transformation, boost exports, or ensure sustained wage increases. They argue that Nigeria must pivot from merely creating jobs to prioritizing mechanization, skills development, energy reliability, and innovation—essential elements for enhancing output per worker and improving the sector’s competitiveness on a global scale.
