Nigeria's journey towards a prosperous economic future depends on a decisive pivot from raw material production to advanced manufacturing, according to a leading financial expert.
The Three-Tier Path of Economic Development
Paul Alaje, the Chief Economist at SPM Professionals, laid out this vision during a recent interview. He categorised nations into three distinct tiers based on their economic activities. The first tier includes countries stuck "beneath", relying solely on primary production like farming and mining.
The second tier consists of nations that rise "above" by processing raw materials into finished goods. The final and most advanced tier is occupied by economies that move "beyond" through sustained excellence and innovation in manufacturing.
Alaje stressed that for Nigeria to experience a true economic transformation, it must actively ascend this ladder. "The economic miracle of Nigeria that we expect as a country, whether you are in the north or in the south, whether you are in the east or you are in the west, is in manufacturing," he declared.
Manufacturing as a Shield for the Naira and Reserves
To support his argument, Alaje pointed to the tangible impact of the Dangote Refinery. He noted that before the refinery began operations, Nigeria's foreign reserves faced severe pressure due to the massive cost of importing refined petroleum products.
He explained that a robust manufacturing base would directly strengthen Nigeria's foreign reserves, boost the value of the Naira, and attract crucial long-term investment into the real sector, moving beyond volatile portfolio investments. This position is backed by research indicating that stronger reserves lead to currency appreciation and greater investor confidence.
Alaje drew powerful parallels with global success stories, including South Korea's industrialisation, Japan's electronics revolution, and Germany's post-war recovery. Each of these nations, he emphasised, prioritised production over mere consumption.
Learning from China, Aiming for African Leadership
While acknowledging recent Nigerian policy reforms like subsidy removal and market liberalisation, Alaje insisted the government's next critical focus must be creating an enabling environment for manufacturers. He identified improved security as a paramount concern.
Citing insights from his three-year study of China's rise, Alaje highlighted how a clear government-led manufacturing roadmap galvanised private sector participation and attracted investment from the diaspora, ultimately establishing China as the world's factory.
He urged Nigeria to set ambitious but realistic goals. While becoming a global manufacturing hub overnight may not be feasible, the country should aspire to be more than "a country of commerce and farming." The ultimate goal, he concluded, should be for Nigeria to become "the manufacturing centre of the entire Africa."
