Project – Local production and its effect on the Nigerian Economy

CHAPTER ONE

INTRODUCTION

• Background to the Study

Local production plays a significant role in the Nigerian economy. According to a study by Ojukwu and Shopeju (2010), local production has a significant impact on the Nigerian economy by creating jobs, reducing poverty, and promoting economic growth. The authors argue that local production, particularly in the agricultural sector, has the potential to transform the Nigerian economy by reducing dependence on oil exports.

However, local production in Nigeria faces several challenges. According to a report by the World Bank (2015), inadequate infrastructure, lack of access to finance, and poor quality control are some of the major obstacles to local production. These challenges have hindered the growth of local industries and limited their contribution to the Nigerian economy.

Despite these challenges, there have been some notable successes in local production. For example, the Nigerian Breweries Plc, the largest brewing company in Nigeria, has significantly contributed to the Nigerian economy through its local production. According to a study by Adebayo and Oluwaseun (2017), the company’s local production has created jobs, generated revenue for the government, and stimulated economic growth.

Furthermore, the Nigerian government has implemented several policies to promote local production. According to a report by the Nigerian Investment Promotion Commission (2018), these policies include tax incentives for local manufacturers, import restrictions on certain goods, and initiatives to improve access to finance for local producers. These policies have had mixed results, with some sectors experiencing growth and others struggling.

However, more needs to be done to fully harness the potential of local production in Nigeria. According to a study by Ogunnaike and Iyoha (2019), there is a need for more investment in infrastructure, improved access to finance, and better quality control to boost local production. The authors argue that these measures are crucial for the sustainable development of the Nigerian economy.

Local production has a significant impact on the Nigerian economy, but it faces several challenges. Despite these challenges, there have been some successes, and the government has implemented policies to promote local production. However, more needs to be done to fully harness the potential of local production.

1.2. Statement of the Problem

The problem of local production and its effect on the Nigerian economy is multifaceted and complex. According to a study by Ojukwu and Shopeju (2010), the Nigerian economy has been heavily dependent on oil exports, which has led to a neglect of local production sectors such as agriculture and manufacturing. This over-reliance on oil has made the economy vulnerable to global oil price fluctuations, leading to economic instability.

The second issue is the lack of infrastructure to support local production. A report by the World Bank (2018) highlighted that inadequate power supply, poor road networks, and limited access to finance are major obstacles to local production in Nigeria. These infrastructural deficits have hindered the growth of local industries and reduced their competitiveness in the global market.

Thirdly, the problem of low technological advancement in local production cannot be overlooked. According to a study by Akinlo (2004), the low level of technological development in Nigeria has resulted in low productivity in local industries. This has further widened the gap between Nigeria and developed countries in terms of industrial development.

Furthermore, the issue of policy inconsistency and lack of government support for local production is a major problem. A study by Ogbalubi and Wokocha (2013) revealed that inconsistent government policies and lack of adequate support for local industries have discouraged investment in local production. This has resulted in the stagnation of local industries and the economy at large.

The fifth problem is the high level of importation in Nigeria. According to a report by the Nigerian Bureau of Statistics (2019), Nigeria’s import bill has been on the rise, which has negatively affected local production. The high level of importation has led to the closure of many local industries due to their inability to compete with imported goods.

Lastly, the issue of inadequate skilled manpower for local production is a significant problem. A study by Oyelaran-Oyeyinka (2007) indicated that the lack of skilled manpower in Nigeria has affected the quality and quantity of local production. This has further hindered the growth and development of local industries and the Nigerian economy as a whole.

1.3 Aim and Objectives of the Study

The aim of the study is to examine local production and its effect on the Nigerian Economy. The specific objectives of the study are:

1. To examine the current state of local production in Nigeria and its contribution to the national economy.
2. To identify the challenges hindering the growth of local production in Nigeria.
3. To analyze the impact of local production on job creation and poverty reduction in Nigeria.
4. To evaluate the policies and initiatives implemented by the Nigerian government to boost local production.

1.4. Research Questions

The research questions are buttressed below:

1. What is the current state of local production in Nigeria and how does it contribute to the national economy?
2. What are the challenges hindering the growth of local production in Nigeria?
3. How does local production impact job creation and poverty reduction in Nigeria?
4. What are the policies and initiatives that the Nigerian government has implemented to boost local production?

1.5. Research Hypothesis

The hypothetical statement of the study is stated below:

H_O: Local production has no significant impact on job creation and poverty reduction in Nigeria

H_O: Local production has significant impact on job creation and poverty reduction in Nigeria

1.6. Significance of the Study

The significance of local production on the Nigerian economy cannot be overstated. Local production, which refers to the manufacturing, processing, and production of goods and services within the country, plays a crucial role in the economic development of Nigeria. It stimulates economic growth by increasing the Gross Domestic Product (GDP) and creating employment opportunities. When local industries thrive, they contribute to the GDP through the production of goods and services, which increases the country’s economic output.

Moreover, local production helps to reduce the country’s dependence on imported goods. Nigeria, like many other developing countries, has been grappling with the challenge of import dependence. This dependence often leads to a negative balance of trade, which can be detrimental to the economy. However, by promoting local production, Nigeria can reduce its import bill, conserve foreign exchange, and improve its balance of trade. This, in turn, strengthens the country’s currency and improves its economic stability.

Local production also fosters innovation and technological advancement. When local industries are encouraged, they are more likely to invest in research and development, leading to the creation of innovative products and services. This not only enhances the competitiveness of the Nigerian economy but also promotes technological advancement, which is a key driver of economic development.

Furthermore, local production has a significant impact on job creation. The manufacturing and processing industries are labor-intensive and can provide employment opportunities for a large number of people. This helps to reduce unemployment and poverty rates, which are significant challenges in Nigeria. By creating jobs, local production also stimulates consumer spending, which further boosts economic growth.

Local production also has a multiplier effect on the Nigerian economy. The income earned by the workers in the local industries is spent on goods and services, which stimulates demand and leads to further economic activity. Moreover, local industries also create opportunities for local suppliers, which helps to develop the local supply chain and further stimulates economic activity.

In conclusion, local production plays a pivotal role in the Nigerian economy. It contributes to economic growth, reduces import dependence, fosters innovation, creates jobs, and stimulates further economic activity. Therefore, promoting local production should be a key strategy in Nigeria’s economic development plans.

 1.7. Scope of the Study

The study examines the local production and its effect on the Nigerian Economy. The study is restricted to Nigeria Ministry of Finance.

1.8. Operational Definition of Terms

Local production: This refers to the manufacturing, cultivation, or creation of goods and services within a specific area or region. In the context of Nigeria, local production could include anything from the farming of crops, to the manufacturing of goods, to the provision of services. It’s a crucial aspect of a country’s economy because it can reduce dependence on imports, create jobs, and stimulate economic growth.

Effect: In general terms, an effect is a change that is a result or consequence of an action or other cause. It refers to the outcome, result, or impact of something. In the context of this discussion, the ‘effect’ would be the impact or change that local production has on the Nigerian economy.

Economy: The economy refers to the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services. It includes all activities related to production, consumption, and trade of goods and services in an area. An economy is made up of the economic system of a country or other area, the labor, capital and land resources, and the economic agents that socially participate in the production, exchange, distribution, and consumption of goods and services.

Project – Local production and its effect on the Nigerian Economy