Local Content Policies and Backward Integration in Nigeria Final Report

Nigeria has experienced rapid but low-quality growth over the past decade. This has been accompanied by limited structural change and little economic transformation. The share of manufacturing in Nigeria’s gross domestic product (GDP) is low relative to that in comparator countries, and the country’s heavy reliance on oil and gas exports has meant little attention has been paid to developing the manufacturing sector or diversifying into more complex products. Many of Nigeria’s manufacturing firms are inward-looking, inefficient and uncompetitive, and levels of capacity utilisation in the sector tend to be low, even in prominent industries such as beverages, textiles, cement and tobacco manufacturing.

In this collaborative research prepared by the Nigerian Economic Summit Group (NESG) and ODI’s Supporting Economic Transformation (SET) programme, we analyse and discusse the economics behind the use of local content policies to increase backward integration; the local content policies applied in Nigeria and the results; international experience with similar policies; and views from firms and policy-makers…