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© 2025 by the authors; licensee Asian Online Journal Publishing Group 
 

Economy 
Vol. 12, No. 2, 108-119, 2025 

ISSN(E) 2313-8181/ ISSN(P) 2518-0118 
DOI: 10.20448/economy.v12i2.7390 

© 2025 by the authors; licensee Asian Online Journal Publishing Group 

 
 

 
 
 
Industrialization and economic growth in Nigeria, 1990 – 2024 

 
Anibuko, Chinenye Florence1   
Godly Otto2 

 

 

 
( Corresponding Author) 

 
1Department of Economics, Delta State University, Abraka Nigeria. 
1Email: Juliedon007@gmail.com  
2Department of Economics, University of Port Harcourt, Nigeria. 
2Email: Godly.otto@uniport.edu.ng  

 
 

This research seeks to examine the nexus between industrialization and economic growth in Nigeria. The specific purpose 
of the study is to analyze the effects of manufacturing output, mining, electricity supply, construction, water/sewage/waste 
management, and labor force participation on Nigeria’s real gross domestic product growth rate. This study adopts an ex-
post facto research design. The period covered spans from 1990 to 2024. Data were collected as annual time series 
secondary data from the Central Bank of Nigeria (CBN) statistical bulletin (various years), World Development Indicators, 
and World Energy Statistics from the International Energy Agency. The data were analyzed using the Error Correction 
Model. Additional tests conducted include unit root, cointegration, and autocorrelation tests. The research employs an 
econometric approach. The results reveal that manufacturing, mining, electricity supply, construction, and 
water/sewage/waste management had a negative effect on economic growth in Nigeria in the short run. However, only the 
effects of manufacturing, electricity, construction, and waste management on the Nigerian economy were statistically 
significant. In conclusion, industrialization has a negative effect on Nigeria’s economic growth. Nigeria’s industrialization 
efforts have not yielded the expected positive effects on the economy, leading to declining outputs in manufacturing, 
mining, electricity supply, construction, and water/sewage/waste management sectors. When electricity supply and 
distribution to the industrial sector are adequately enhanced, coupled with increased productive capacity, Nigeria’s 
economy will be on the path to long-term growth. 
 

Keywords: Construction, Electricity supply, Labour force participation, Manufacturing, Mining. 

 
Citation | Florence, A. C., & Otto, G. (2025). Industrialization and 
economic growth in Nigeria, 1990 – 2024. Economy, 12(2), 108–119. 
10.20448/economy.v12i2.7390 
History:  
Received: 14 April 2025 
Revised: 30 August 2025 
Accepted: 3 September 2025 
Published: 9 September 2025 
Licensed: This work is licensed under a Creative Commons 

Attribution 4.0 License  
Publisher:  Asian Online Journal Publishing Group 
 

Funding: This study received no specific financial support.  
Institutional Review Board Statement: Not Applicable. 
Transparency: The   authors   confirm   that   the   manuscript   is   an   
honest, accurate, and transparent account of the study; that no vital features of 
the study have been omitted; and that any discrepancies from the study as 
planned have been explained. This study followed all ethical practices during 
writing. 
Data Availability Statement: Upon a reasonable request, the supporting data 
of this study can be provided by the corresponding author. 
Competing Interests: The authors declare that they have no competing 
interests. 
Authors’ Contributions: Methodology development and analysis, Anibuko 
Chinenye Florence (ACF); Conceptualization and theoretical foundation, 
Godly Otto (GO). Both authors have read and agreed to the published version 
of the manuscript. 

 

Contents 
1. Introduction .................................................................................................................................................................................... 109 
2. Literature Review .......................................................................................................................................................................... 110 
3. Research Methodology ................................................................................................................................................................. 113 
4. Data Analysis and Discussion ...................................................................................................................................................... 114 
5. Conclusion and Recommendations ............................................................................................................................................. 117 
References ............................................................................................................................................................................................ 118 
 

 
 

 

 

 

 

mailto:Juliedon007@gmail.com
mailto:Godly.otto@uniport.edu.ng
https://creativecommons.org/licenses/by/4.0/
https://creativecommons.org/licenses/by/4.0/
https://www.doi.org/10.20448/economy.v12i2.7390


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Contribution of this paper to the Literature 
Previous studies have linked industrialization to either economic growth or development. Evidence 
available to researchers reveals that none of the previous studies used a combination of manufacturing 
sector output, energy supply, agricultural output, exchange rate, and labor force participation as proxies 
for industrialization. 

 
1. Introduction 

African countries gained their independence in the 1960s, and this period coincided with the promotion of 
industrial development and growth as a major target for African countries. Countries in Africa at the time viewed 
industrial sector development as a way of growing local capacity and decreasing their reliance on developed nations 
in Europe and America. African countries were held by one strong belief that developing their vast agrarian land 
would boost industrial development and create a progressive economy (Isiksal & Odoh, 2023). 

In Nigeria, rudimentary industrial activities existed right from the pre-colonial era, but these were more agro-
based, i.e., concentrated in the agricultural sector, which provided raw materials in exchange for foreign goods with 
the Europeans during the colonial era. Nigeria was dependent on agriculture up to 1972, when oil became the 
major foreign exchange earner in the country. During this period, the nation’s foreign earnings were below 20% of 
Gross Domestic Product as a result of low-quality industrial goods, whereas almost all the capital goods were 
imported (Bakare-Aremu & Osobase, 2015). At this period, about 63% to 80% of the nation’s gross domestic 
product (GDP) was from the exportation of primary agricultural products. The level of industrial activities in the 
country was very low, and most commercial activities were established and controlled by foreign companies such as 
the United Africa Company (UAC) Ltd, John Holt, Paterson Zochonis (PZ), Companies Francaise de l’Afrique 
Occidentale (CFAO), Societe Commerciale de l’Afrique Occidentale (SCOA), and the Union Trading Company 
(Bakare-Aremu & Osobase, 2015). These companies engaged in trade and commercial activities, especially in the 
importation and distribution of foreign-manufactured goods (Ekpo, 2014).  

To stimulate economic growth, a series of industrial development policies and initiatives have been initiated, 
including import-substitution industrialization, export-promotion strategies, and foreign private investment 
industrialization (Ayodele & Falokun, 2023). Furthermore, policy reform measures such as industrialization policies 
and structural adjustment programs have been devised and executed, resulting in substantial public investment in 
the industrial sector. From the 1970s to the 1990s, the Nigerian government embarked on a series of investment 
projects, such as the iron and steel plant at Ajaokuta, steel rolling mills at Warri, Kaduna, and Oshogbo, aluminum 
smelter plant at Ikot Abasi, crude oil refineries at Port Harcourt, Warri, and Kaduna, petrochemical and fertilizer 
factories at Port Harcourt, cement industries at Calabar and Nkalagu, machine tool, sugar plants, and marble 
industries, petrochemical gas plant at Akwa-Ibom (Okorontah and Uruakpa (2023). 

Nigeria's economic indices at various stages of industrialization have remained unimpressive for more than 
thirty years. High imports of industrial inputs, declining capacity utilization, high production costs, low value 
added, a slow rate of output growth, a lack of job creation, and poor connections with other economic sectors are 
some of the characteristics of Nigeria's industrial sector (Obioma & Ozughalu, 2020). In 2022, the industrial 
sector's annual growth rate as a percentage of GDP was 30.8%; in 2023, it increased slightly to 32.2% (Central 
Bank of Nigeria, 2023). Ekpo (2014) also observed that the industrial sector's share of GDP in Nigeria is far less 
than what is obtainable in other countries. With manufacturing sector output contributing a little less than 12.7% 
to GDP in 2023 (Central Bank of Nigeria, 2023), Nigeria’s industrialization prospects are still on the rise. 

Nigeria boasts as one of the top five largest economies in Africa, with a population in excess of 200 million as of 
the end of 2023, and a GDP of over $500 billion World Bank (2024). Nigeria is the continent’s biggest oil exporter 
and is home to large natural gas reserves, as noted by World Bank (2024). According to World Bank (2024), the 
Nigerian economy has recorded considerable acceleration in growth; real GDP grew by 6.3 percent, 7.6 percent, 
and 7.4 percent in 2019, 2020, and 2021 respectively. Many analysts believe the industrial sector (manufacturing 
and extractive) holds an undeniably key role in Nigeria’s economic development, given that this sector is 
responsible for about 85 percent of foreign exchange earnings (Central Bank of Nigeria, 2023). There is a need to 
investigate Nigeria’s industrial development pattern and how this affects economic growth. 
 

1.1. Statement of the Problem 
Despite the vast array of human and natural resources available in the country, one may question why the expected level 

of economic growth has not been achieved. According to Kpou (2024), Nigeria is a major exporter of natural liquefied 
gas and crude oil worldwide, but the possibility of having self-consumption seems a tedious problem. It has been a 
supplier of power energy (electricity) to some neighboring countries like Benin and the Niger Republic, but the 
nation’s industrial consumption of such energy appears very low. Electric power, transportation, technological 
innovations, and good market facilities with effective communication systems, which are major aids to 
industrialization worldwide, are lacking in the country. How much the industrial sector has contributed to growth 
in the Nigerian economy, given the current state of the drivers of industrialization, such as infrastructure and 
power, remains to be ascertained in this research. 

Furthermore, since Nigeria gained its independence, a great deal of research has been conducted on the 
country's industrialization. Everyone seems to agree that the industry has performed poorly over the years. 
Nigeria's industrial sector has been characterized by high import content of industrial inputs, falling capacity 
utilization, high production costs, poor value added, declining output growth, and low employment generation, 
according to Obioma and Ozughalu (2020). According to Metieh and Mgbomene (2025), inflation is a major factor 
contributing to poor employment, which impacts investment in Nigeria. The average annual growth rate of 
industrial output as a proportion of GDP over the study period was around 28%, which is far higher than what is 
achieved in many emerging nations. The production of the agricultural sector as a proportion of GDP was 22% 
during the same period, surpassing the combined contribution of the industrial and manufacturing sectors, while 
the output of the manufacturing sector as a percentage of GDP was less than 15% (Central Bank of Nigeria, 2023). 



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Policies derived from existing research of this kind are crucial, given the current shift in emphasis toward measures 
that would industrialize the Nigerian economy. 

Once more, the outflow of multinational corporations from the Nigerian market motivates the researcher to 
examine the connection between specific elements of the industrial sector and economic growth in Nigeria. 
According to Nairametrics (2023), 767 manufacturing enterprises in Nigeria closed their doors in 2023 alone. 
Additionally, a 2023 assessment by the Manufacturing Association of Nigeria indicates that 335 businesses in 
Nigeria's industrial sector faced significant difficulties. Therefore, this study investigates how industrialization 
influences Nigeria's economic growth. 
 

1.2. Objectives of the Study 
The general objective of this study is to investigate the effects of industrialization on the growth of the 

Nigerian economy. The specific objectives are to: 
i. Investigate the relationship between manufacturing sector output and economic growth in Nigeria. 

ii. Analyze the effect of the mining sub-sector output on Nigeria's economic growth. 
iii. Investigate the extent to which electricity supply has affected Nigeria’s economic growth. 
iv. Evaluate the effect of the construction sub-sector output on Nigeria’s economic growth. 
v. Determine how output from water supply, sewage, and waste management has affected economic growth in 

Nigeria. 
vi. Examine the relationship between the labour force participation rate and economic growth in Nigeria. 
 

1.3. Research Hypotheses 
In line with the research objectives specified above, the following research hypotheses, stated in their null 

forms, will provide further guidance to the research. 
H01: There is no significant relationship between manufacturing sector output and economic growth in Nigeria. 
H02: There is no significant relationship between the mining sub-sector and economic growth in Nigeria. 
H03: There is no significant effect of electricity supply on economic growth in Nigeria. 
H04: Construction sub-sector output has no significant effect on Nigeria’s economic growth. 
H05: Water supply, sewage and waste management do not significantly affect Nigeria’s economic growth. 
H06: There is no significant effect of labour force participation on Nigeria’s economic growth. 
The unit scope of this research is industrialization and economic growth of Nigeria. This study covers the 

period 1990-2024. This period is selected because of the availability of data and the suitability of the year span for 
fitting an econometric model. The variables for this study include real gross domestic product growth rate 
(dependent variable), while manufacturing output, mining output, energy/electricity supply, construction sub-
sector output, water/sewage/waste management output, and labor force participation rate were employed as 
independent variables. 
 

2. Literature Review 
The literature review is subdivided into three distinct but complementary parts. First is the conceptual review, 

which stems from the conceptual framework. Second is the theoretical framework, and third is the empirical review. 
Based on these various aspects of the literature review, the gap in the literature is established. 
 

2.1. Conceptual Review 
The conceptual issues are discussed in detail under this heading. The conceptual clarifications revolve around 

the meaning of industrialization, the drivers of industrial sector growth, which include the manufacturing sector, 
the agricultural sector, energy supply, the labour market, and a sustained exchange rate. These concepts are shown 
in the framework below. 

Figure 1 illustrates the conceptual framework of the study, showing the nexus between the industrialization 
variables and the economic development of Nigeria. 

 

 Figure 1. Conceptual framework. 

 
 
 



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2.1.1. Industrialization 
Establishing and growing industries in a certain location, region, or nation is referred to as industrialization 

(Obioma & Ozughalu, 2020). It entails the establishment of several enterprises around the nation. A nation's 
numerous industries lead to the production of a wide variety of goods. Therefore, industrialization is the process of 
increasing a nation's ability to create a wide range of commodities, including the extraction of raw materials and 
the production of semi-finished and finished items. Industrialization, according to Anyanwu, Oyefusi, Oaikhenan, 
and Dimowo (1997) and Ekpo (2014) is the process of turning raw materials into (a) consumer goods, (b) new 
capital goods that enable the production of more consumer goods, including food, using the same human resources, 
and (c) social overhead capital, which, when combined with human resources, offers new services to both 
individuals and businesses. 
 

2.1.2. Drivers of Industrialization in Nigeria 
The contribution of a robust industrial sector to output growth, employment generation, and ultimately, 

enhanced standards of living cannot be overemphasized. The Nigerian industrial sector has been plagued by several 
impediments, which have resulted in sub-optimal performance, thereby making its contribution to gross domestic 
product (GDP) and employment generation remain far below potential. To unlock the huge potentials of the sector, 
several variables account for the growth of the industry, and they are discussed within the context of this research. 

(a) Manufacturing Sector Output: Manufacturing sector output refers to the total production made by the 
manufacturing sector within a particular year, expressed in monetary terms  (Egbulonu, Dim, & Agba, 2018). The 
market value of the products from the manufacturing sector sustains the value of the economy, and these products 
that drive the industrial sector are purely manufactured goods and services. Similarly, manufacturing is the process 
or business of producing goods in factories with machines. In Nigeria, the index of manufacturing production, 
estimated at 108.1 (1990=100), rose by 1.6% from the level in 2022, while the average capacity utilization of the 
manufacturing sector showed a marginal improvement, with a 1.1 percentage point increase to 57.9% in 2023. The 
improved performance in the cement sub-sector accounted for the growth in the manufacturing sector, including 
petroleum refining, sugar and confectionery, electronics and electrical components, and motor vehicle assembly. 
Afolabi and Laseinde (2019) remarked that industrialization sets the condition to achieve sustainable economic 
growth in all economies. It can also be stated that the dynamic benefits of the manufacturing sector are activating 
economic transformation in this modern-day economy, which is directly responsible for speeding up investment 
capital in the agricultural sector and the overall economy (Afolabi & Ogoh, 2017). 

(b) Energy/Electricity Supply Boost: Industrialization without proper and constant electricity is like a skeletal 
framework without fresh blood, which is improper for moving or work. Whereas, for any meaningful 
industrialization process to take place in any economy, electricity supply and demand must remain 
uncompromising elements of the process, as blood and flesh are very meaningful to the human body for life to exist. 
Electric power consumption was used in the study, and it measures the production of power plants and combined 
heat and power plants, less transmission, distribution, and transformation losses, and own use by heat and power 
plants (World Bank, 2024). 

According to data from the National Bureau of Statistics (2023) total installed electricity generation capacity 
stood at 12,232 MW in 2023, compared with 9,937 MW in 2022. The increase in generation capacity was a result 
of the completion of the generation plants at Omotosho, Ihovbor, and Geregu power plants (Okezie, Nwosu, & 
Marcus, 2017). A disaggregation of the installed capacity showed that thermal power and hydropower accounted 
for 84.5 and 15.5 percent, respectively. Further analysis indicated that the erstwhile power holding company of 
Nigeria (PHCN) had 81.8 percent of the total installed capacity. Meanwhile, the independent power plants (IPP) 
accounted for the remaining capacity (Central Bank of Nigeria, 2023). Energy consumption: at 160.3 (1990=100), 
the index of energy consumption fell by 10.7% compared with a decline of 5.2% recorded in 2022 (National Bureau 
of Statistics, 2023). In absolute terms, aggregate energy consumed in 2013 stood at 13.40 million tons of coal 
equivalent (toe), compared with 16.6 million (toe) in the preceding year, representing a decline of 19.1%. 

(c) Mining and quarrying sub-sector: With increasing demand for energy and low-carbon technologies, an 
unprepared extractive industry is likely to struggle to meet rapid increases in demand for minerals and metals for 
production. Mining involves the extraction of naturally occurring minerals such as coal, ores, crude petroleum, and 
natural gas (National Bureau of Statistics, 2023). Excluding crude petroleum and natural gas activities, mining and 
quarrying, including coal mining, metal ores, quarrying, and other minerals, jointly contributed about 0.09% to the 
national GDP during the period from 2010 to 2024. This was a steady rise over the period; from the N51,877.80 
million recorded in 2010, output grew by N7,691.54 million or 14.83% in 2011 to reach N59,569.34 million that 
year.  

The National Bureau of Statistics (2023) noted that there are about thirty-four minerals that have been 
identified in the country, of which only 13 are being actively mined, processed, and marketed. These include coal 
(which has an export potential of 15 million tonnes per annum valued at US$1 billion), kaolin, baryte, limestone, 
dolomite, feldspar, glass sand, gemstones (haphazard), gold (in small quantities), iron ore, lead-zinc, tin and its 
associated minerals, and recently gypsum. The remaining twenty-one (21) minerals, although in demand, are 
untapped, creating significant potential for industrialization in Nigeria, which can contribute to economic 
development. 

(d) Construction Sub-sector: All over the world, the construction industry is continually growing. This 
industry is primarily concerned with the development of civil engineering works and heavy infrastructural 
provisions (roads, bridges, railways, etc.), residential and commercial real estate, and their maintenance (National 
Bureau of Statistics, 2021). Thus, the continual growth can be explained by the dynamism of development and the 
need to accommodate social and demographic changes that happen over time. Factors such as migration and 
urbanization, a rising middle class with their demands for better living conditions (better houses, road networks), 
and societal needs for social infrastructure all combine to give the sector the impetus for growth. According to the 
National Bureau of Statistics (2021) demands for real estate and housing, the provision of infrastructure to support 



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an increasing population size, the need to open up communities to foster inter-state and inter-regional trade and 
movement, etc., have posed a great impetus for the growth of the construction sector in Nigeria. 

(e) Water Supply, Sewage, and Waste Management: According to Iyaji (2021) and Mgbomene (2024), the 
economic development witnessed in Nigeria has, to some extent, contributed to the problem of water pollution. 
The primary sources of water pollution in Nigeria today include waste discharged into water bodies from domestic 
sewage, industrial effluents containing organic pollutants, and wastes from chemicals, heavy metals, and mining 
activities. The major water-polluting industries are refineries, fertilizer production, pesticides, chemical 
manufacturing, leather processing, pulp, and paper industries (Fajana, 2019). Globalization and its tactics of 
concentrating industries in African countries have also created the problem of solid and hazardous waste in 
Nigeria. In fact, solid waste generates air and water pollution in urban areas where industries are concentrated in 
Nigeria. As a result of globalization, urbanization, and industrialization, there is an emerging problem of 
unregulated urban growth lacking facilities such as waste collection, transportation, treatment, and disposal, which 
pollutes the atmosphere and water resources. Rotting garbage and blocked drains, characteristic of many countries 
including Nigeria in the current era of globalization, spread communicable diseases and pollute water resources 
(Andrew, 2022). Therefore, it is evident that industrialization, water, and waste management are cross-cutting 
issues among key sectors in Nigeria, and to achieve meaningful economic development, water, sewage, and waste 
management must be effectively addressed. 

(f) Labour Force Participation: For this study, the labour force comprises people aged 15 and older who supply 
labour for the production of goods and services during a specified period. It includes people who are currently 
employed and people who are unemployed but seeking work,, as well as first-time job-seekers (World Bank, 2024). 
Although there is no doubt that labour force participation can lead to increased labour supply for industrial 
production in Nigeria, investment in private industries also spurs labour force participation because it not only acts 
as a stimulus but also "leads the way" to industrialization (Yecho & Ityonzughul, 2020). 
 

2.2. Theoretical Framework 
This study is hinged on two theories. They include the unbalanced growth theory and the Solow growth 

theory. The unbalanced growth theory is propounded by Hirschman (1958). He said that a deliberate unbalancing 
of the economy according to a pre-designed strategy is the best way to activate growth in an underdeveloped 
nation. This theory assumes that, when a strategic sector is fully developed, it causes the growth of other sectors 
and the economy will lead to new investment opportunities and so pave the way for further economic development, 
as such growth stems from leading sectors of the economy to the followers (Jhingan, 2012). This theory was 
adopted by Nigeria in the 1970s, the selective credit policies. Furthermore, one of the fundamental requirements for 
growth is that income and capital should be used to fully utilize existing resources so that economic growth can be 
enhanced. Thus, the full development of a strategic sector causes other sectors to develop, and one ingredient for 
development or growth to occur is the infusion of capital and labor. Following the two theories, this study specifies 
as follows: 

𝑌 =  𝑓(𝐾, 𝐿)          (1) 
Where, Y = Output, K = Input of capital and L = Labour, (Chamberlin & Yuem, 2006).  
However, the model was modified to fit in the present study by using the function. 

𝑌 =  𝑓(𝑋𝑖)          (2) 
Where Y = GDP (proxy of economic growth) and Xi = the products of capital and labour requirements for 

industrialization from various sectors. 
 

2.3. Empirical Review 
The review of related studies is aptly shown in Table 1 below, which highlights the key elements of previous 

studies while also identifying some gaps in these studies. 
 
Table 1. Summary of empirical literature review. 

Author and date Study Outcome/Finding Method Gap 

Afolabi and Ogoh 
(2017) 

Relationship between 
industrial output and 
economic growth in 
Nigeria 

An increase in industrial 
output coupled with 
agricultural output 
increases its value added 
to the economy. 

ARDL model Labour, mining, 
sewage/waste and 
electricity factors were not 
considered in their model. 

Obioma, 
Anyanwu, and 
Kalu (2017) 

Effect of industrial 
development on 
economic growth in 
Nigeria 

Positive but insignificant 
impact of industrial 
output on economic 
growth. 

ARDL model Labour, mining, 
sewage/waste, and 
electricity factors were not 
considered in their model. 

Afolabi and 
Laseinde (2019) 

Impact of 
manufacturing sector 
output on economic 
growth in Nigeria 

Positive effect of 
manufacturing sector 
output on RGDP. 

ARDL and 
Granger causality 
techniques 

Labour, mining, 
sewage/waste, and 
electricity factors were not 
considered in their model. 

Attiah (2019) Impact of 
manufacturing and 
the service sectors on 
the economic growth 
of developed and 
developing countries 

Significant and positive 
relationships were found 
between manufacturing 
output and GDP. 

Multiple 
regression 
analysis 

Labour, mining, 
sewage/waste, and 
electricity factors were not 
considered in their model. 

Sahar (2020) Effect of 
industrialization on 
the economic growth 
of Pakistan 

The study revealed a 
direct relationship 
between industrial output 
and GDP in Pakistan. 

ARDL model The study was not carried 
out in Nigeria 

Kida and Impact of Crude petroleum and Error correction The variables of the study 



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Angahar (2020) industrialization on 
economic growth in 
Nigeria 

natural gas, 
manufacturing, and solid 
minerals significantly 
contributed to economic 
growth. 

model (ECM). concentrated only on the oil 
industry. 

Yecho and 
Ityonzughul 
(2020) 

Challenges affecting 
the complementary 
role of agriculture to 
industrialization in 
Nigeria. 

Through agriculture, 
industrialization enhances 
sustainable development 
in Nigeria. 

Discussion method The research was not 
empirical as no data were 
analyzed 

Abomaye-
Nimenibo (2021) 

Impact of industrial 
policy reforms on 
economic 
transformation and 
diversification of 
Nigeria 

Human capital, labour 
input, and capital stock do 
not contribute 
significantly to economic 
growth. 

Multiple 
regression 
analysis 

The variables were good, 
but manufacturing and 
mining output as critical 
industrialization drivers 
were not considered. 

Usman and 
Lazarus (2021) 

Impact of 
industrialization on 
economic growth in 
Nigeria 

Labour-industrial output 
ratio also contributes 
negatively to per capita 
GDP. 

Multiple 
regression 
technique 

Manufacturing and mining 
output, as key drivers of 
industrialization, were not 
considered. 

Ibitoye, Ogunoye, 
and Kleynhans 
(2022) 

Impact of 
industrialization on 
the growth of 
Nigeria’s economy 

Industrial output and FDI 
increased growth while 
interest rate and exchange 
rate decreased growth. 

Error correction 
and Granger 
causality tests 

The study did not include 
manufacturing/mining 
output and even labour 
utilization as drivers of 
industrialization. 

Isiksal and Odoh 
(2023) 

Relationship between 
GDP, agriculture, 
industry, and the 
services sector in 
Nigeria 

The results revealed that 
agriculture, industry, and 
services had a significant 
positive relationship with 
GDP. 

Ordinary least 
squares regression 
and Granger 
causality 

The variables of 
industrialization were 
aggregate. 

Okorontah and 
Uruakpa (2023) 

Nigeria's industrial 
policy and economic 
performance 

The manufacturing sub-
sector has not contributed 
enough towards the 
economic growth of 
Nigeria. 

Robust least 
square estimates 

The study did not consider 
labor and electricity as 
specific industrialization 
variables. 

Ekpo (2014) An analytical 
exploration of 
Nigeria's industrial 
sector performance 
and policies from 
1960 to 2023. 

The Nigerian 
manufacturing sector, in 
particular, had performed 
below expectations. 

Systematic 
literature review 

No data were analyzed 

Oyeku (2024) Relationship between 
labor force dynamics 
and economic growth 
in Nigeria 

Labor force, gross fixed 
capital formation, and 
female primary school 
enrollment have positive 
and significant long-term 
effects on economic 
growth. 

Autoregressive 
distributed lag 

Other drivers of 
industrialization, such as 
manufacturing, mining, 
electricity, sewage, and 
waste management, were 
not considered. 

Ibeaja and 
Amadi (2024) 

Effects of 
restructuring the 
industrial sector on 
economic growth in 
Nigeria 

Manufacturing, crude 
petroleum, and natural 
gas had a positive and 
significant impact on 
economic growth in 
Nigeria. 

ECM and ARDL 
model 

The study did not consider 
the labour and power 
sectors as drivers of 
industrialization. 

Ajmair (2024) Impact of 
industrialization on 
Pakistan's GDP 

All components of the 
industrial sector 
positively affected GDP. 

ARDL model The study was not carried 
out in Nigeria. 

 
It is evident from the above empirical literature review that there are disparities in the results of different 

investigations linking industrialization to economic growth and development. For example, Ibeaja and Amadi 
(2024); Oyeku (2024) and Isiksal and Odoh (2023) found industrialization and its associated variables to have a 
positive and significant effect on the economic development of Nigeria. On the contrary, there is a non-significant 
effect of industrialization on the economy of Nigeria (Ekpo, 2014; Okorontah & Uruakpa, 2023). Attiah (2019) also 
found divergence in the study of the impact of the manufacturing sector and economic growth among developing 
and advanced countries, as the author finds a more pronounced significance among developing countries; as 
against the result of a pronounced significant effect of the industrial sector on economic growth for poorer nations. 
While these studies appear comprehensive, they are non-exhaustive. Thus, conducting a contemporary study will 
fill perceived gaps in the literature in terms of the period of data coverage, as this present research intends to 
extend the data up to 2023. In addition, while previous studies have linked industrialization to economic 
development and growth, none of the works used a combination of the following variables: manufacturing sector 
output, energy supply, agricultural output, exchange rate, and labour force participation. Analyzing the nexus 
between industrialization and economic growth from the perspective of these variables is an effort to narrow the 
variable gap and produce new findings. 
 

3. Research Methodology 
The research design employed in this study is the ex-post facto research design. The adoption of the ex-post facto 



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design is because it is most suitable for secondary data analysis, as it involves a study that analyzes already 
existing data to determine their specific effect on one or a set of other data. Annual time series data sourced from 
the Central Bank of Nigeria (CBN) statistical bulletin (various years) were used for the analyses. The study 
covered the period 1990–2024. Other sources of data include the World Development Indicators and World 
Energy Statistics from the International Energy Agency. The data were analyzed using the Error Correction 
Model. This is justified since the data are time series and have been found to be integrated at first difference, i.e., 
the data are stationary at first difference (Egbulonu et al., 2018). 
 

3.1. Model Specification 
The model for this research is adopted from the Solow growth theory with the infusion of the unbalanced 

theory. However, the contemporary model of Okorontah and Uruakpa (2023) was examined and modified to suit 
our purpose. The model of Okorontah and Uruakpa (2023) established a functional relationship between the Gross 
Domestic Product (dependent variable), manufacturing sector output, oil export, and non-oil export (independent 
variables). However, by modifying their model, this study adopts the real gross domestic product growth rate 
instead of GDP; in addition, it considers outputs from key sub-sectors that comprise the industrial sector while also 
introducing the labour force participation rate as an intervening variable. The model is specified as follows: 

𝑅𝐺𝐷𝑃𝐺𝑅 =  𝑓(𝐼𝑛𝑑𝑢𝑠𝑡𝑟𝑖𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛)       [3] 
By expanding the right-hand side, we obtain: 

𝑅𝐺𝐷𝑃𝐺𝑅 =  𝑓(𝑀𝐴𝑁, 𝑀𝐼𝑁, 𝐸𝑆𝑆, 𝐶𝑂𝑁, 𝑊𝑆𝑊, 𝐿𝐴𝐵)   [4] 
Where: 
RGDPGR = Real Gross Domestic Product growth rate (Year %). 
MAN = Manufacturing sector output proxied by manufacturing value added (% of GDP). 
MIN = Output of the mining and quarrying sub-sector (% of GDP). 
ESS = Energy supply proxied by electricity supply (KWh/capita). 
CON= Output of the construction sub-sector (% of GDP). 
WSW = Output of water supply, sewage and waste mgt. sub-sector (% of GDP). 
LAB = Labour force participation rate. 
The mathematical form of the model includes the time variant, as well as the coefficients and error terms, as follows. 

𝑅𝐺𝐷𝑃𝐺𝑅𝑡  =  𝛽0  +  𝛽1𝑀𝐴𝑁𝑡  +  𝛽2𝑀𝐼𝑁𝑡  +  𝛽3𝐸𝑆𝑆𝑡  +  𝛽4𝐶𝑂𝑁𝑡  +  𝛽5𝑊𝑆𝑊𝑡  +  𝛽6𝐿𝐴𝐵𝑡  + 𝜀𝑡    [5] 
Where: 

β0 =Intercept of the model. 

β1 –β6 =Unknown coefficients of the model to be estimated. 

εt =Stochastic error term. 
t =Period of study i.e. 1990 – 2023. 
By standardizing the data, we assume a log-linear function and take the natural logarithm of both sides of the 

linear model as follows. 

𝑙𝑛𝑅𝐺𝐷𝑃𝐺𝑅𝑡  =  𝛽0  + 𝛽1𝑙𝑛𝑀𝐴𝑁𝑡  +  𝛽2𝑙𝑛𝑀𝐼𝑁𝑡  +  𝛽3𝑙𝑛𝐸𝑆𝑆𝑡  +  𝛽4𝑙𝑛𝐶𝑂𝑁𝑡  + 𝛽5𝑙𝑛𝑊𝑆𝑊𝑡  +  𝛽6𝑙𝑛𝐿𝐴𝐵 +  𝜀𝑡   
[6] 

Where ‘ln’ represents the natural logarithm of the associated variables. 
Based on the above model, this study expects the following findings. 

a. Manufacturing sub-sector output should have a positive relationship with RGDP growth rate, i.e., β1 > 0. 

b. Mining sub-sector output should have a positive relationship with RGDP growth rate, i.e., β2 > 0. 

c. Energy supply should have a positive relationship with RGDP growth rate, i.e., β3 > 0. 

d. Construction sub-sector should have a positive relationship with RGDP growth rate, i.e., β4 > 0. 
e. Water supply, sewage, and waste management sub-sector should have a positive relationship with RGDP 

growth rate, i.e., β5 > 0. 

f. Labour force participation rate should have a positive relationship with RGDP growth rate, i.e., β6 > 0. 
 
Table 2 presents the Descriptive statistics of the data used in the analysis. 
 
Table 2. Descriptive statistics. 

 RGDP MAN MIN ESS CON01 WSW LAB 

 Mean  45184.33  4430.21  13097.35  118.80  1413.50  55.081  32.008 

 Median  42044.78  3708.51  13246.85  125.44  1045.38  30.215  31.575 

 Maximum  75142.39  6684.22  16742.15  156.80  2680.22  184.400  46.300 

 Minimum  21462.73  2898.47  9845.97  74.49  442.274  13.002  18.91 

 Std. dev.  20421.43  1477.83  2075.78  28.37  879.291  50.751  6.707 

 Skewness  0.155139  0.538  0.004 -0.2616  0.359  1.148  0.051 

 Kurtosis  1.378  1.542  1.610  1.462  1.398  3.055  2.643 

 Jarque-Bera  3.864  4.651  2.396  3.738  4.369  7.475  0.200 

 Probability  0.145  0.098  0.302  0.154  0.113  0.224  0.905 

 

4. Data Analysis and Discussion 
The average value for real gross domestic product for the period was N45.184 trillion, and this covered the 

period 1990 through 2024. For other indicators of industrialization, manufacturing and mining have average 
figures of N4,430.2 and N13,097 trillion, respectively. The average electricity supply per capita was 118.8 kWh, 
while the maximum for the period was 156.8 kWh. The maximum percentage of labour force utilization by the 
industrial sector was 46.3%, while the maximum manufacturing, mining, and construction outputs were N6,684.2 
trillion, N16,742 trillion, N2,680 trillion, and N184 million, respectively. 



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An examination of the skewness shows that all the data are right-tailed, i.e., they are positively skewed, except 
for electricity supply, which shows a negative slope. However, the negative skewness of electricity supply did not 
affect the other variables since they have standard deviations that are not very far from the mean. Thus, the 
positive elasticity of the data is confirmed by the skewness of the distribution, which suggests lengthy right tails. 

The Jarque-Bera statistic shows that the data are normally distributed, since their p-values are greater than the 
0.05 critical value. The null hypothesis of the Jarque-Bera test assumes that the data are not normally distributed. 
This implies that the data have a very lengthy right tail with high skewness to the right. This necessitates the 
logging of the data in order to normalize the distribution to be a normal distribution. 

Table 3 shows the summary of the unit root test which ascertains the stationarity of the time series data. 
 
Table 3. Summary of unit root test. 

 
Variables 

ADF test statistics Decision rule Order of integration 

@Level @1st difference 

RGDP -2.8032 0.2062) * -8.2102 (0.0000) * Stationary at 1st difference I(1) 
MAN -1.0811 (0.9172) -4.8814 (0.0022) * Stationary at 1st difference I(1) 
MIN -1.2669 0.8787) * -5.9728 (0.0001) * Stationary at 1st difference I(1) 
ESS -1.6698 0.7420) * -6.6344 (0.0000) * Stationary at 1st difference I(1) 
CONS -2.2805 (0.4315) -4.4697 (0.0062) * Stationary at 1st difference I(1) 
WSW 1.0965 (0.9999) -3.8598 (0.0260) Stationary at 1st difference I(1) 
LAB -2.6956 (0.2447) -4.4649 (0.0086) Stationary at 1st difference I(1) 
Critical value at 5% level = -2.9484 
Critical value at 5% 1st difference = -2.9511 

 
The unit root test above shows that real GDP (RGDP), manufacturing output (MAN), mining output (MIN), 

electricity supply (ESS), construction (CONS), water supply and waste management (WSW), and labour force 
participation rate (LAB) were stationary at first difference, i.e., their statistical properties after first differencing 
were found to be constant over the time period studied. In other words, the variables are said to be integrated of 
order one I(1). 

The end point of the stationarity test carried out above is that we have an I(1) order of integration throughout, 
and as such, we adopt the Johansen cointegration test to ascertain the existence of a long-run relationship among 
the variables. This was affirmed in the works of Egbulonu (2019) and Pesaran, Shin, and Smith (2001).  

The long-run property of the data is ascertained using the Johansen cointegration test. The hypothesis of the 
Johansen test states that 

H0: There is no long run relationship existing amongst the variables.  
H1: There is long run relationship amongst the variables. 
The test is summarized below. 

 
Table 4. Summary of the Johansen cointegration test. 

Hypothesized No. of CE Eqns. Trace statistic 0.05 critical value Max-eigen statistic 0.05 critical value 

None * 189.9241 0.0000 63.57628 0.0003 
At most 1 * 126.3478 0.0001 41.75573 0.0321 
At most 2 * 84.59211 0.0021 31.79669 0.0868 
At most 3 * 52.79542 0.0160 24.03945 0.1333 
At most 4 28.75597 0.0656 15.24123 0.2723 
At most 5 13.51473 0.0972 12.02750 0.1096 
At most 6 1.487235 0.2226 1.487235 0.2226 

 
The Trace statistic in Table 4 above has four (4) cointegrating equations at 5% level of significance. This is 

evidenced in the critical values which are less than 0.05 at None, at most 1, at most 2, at most 3, and at most 4. 
Therefore, we reject the null hypothesis of no long-run relationship since there is at least one significant 
probability value and conclude that there is a long-run relationship between industrialization variables and the 
economic growth rate in Nigeria. Since we have confirmed the existence of a long-run relationship among the 
variables, we estimate the short-run parameters of the model using the error correction model (Egbulonu, 2019; 
Pesaran et al., 2001). 

Table 5 presents the short run coefficients of the model also called the error correction model (ECM). 
 
Table 5. Short-run error correction model. 

Variable Coefficient Std. error t-statistic Prob. 

C 80.574 44.491 1.811 0.090 

MAN -1.810 0.369 -4.907 0.006 

MIN -0.086 0.047 -1.839 0.086 

ESS -0.030 0.013 -2.310 0.039 

CON01 -8.678 3.463 -2.506 0.024 

WSW -6.495 2.061 -3.152 0.035 

LAB 0.254 0.185 1.369 0.191 

ECM(-1) -0.148 0.038 -3.869 0.016 

R-squared 0.730 Durbin-Watson stat 1.909 

Adjusted R-squared 0.605 F-stat. 5.807 

 
The short-run estimates above have a speed of adjustment of 14.81 percent annually. This means that the 

model corrects its previous period’s disequilibrium at an estimated speed of 14.81 percent every year. Furthermore, 
the coefficients of manufacturing sub-sector output and mining sub-sector output are negative in the short-run 



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period. This means that manufacturing sub-sector output and mining sub-sector decrease the economic growth 
rate by 1.0, 0.810, and 0.086 units in the short period, respectively. 

Manufacturing sector output has a negative impact on economic growth by -1.810 units, which implies that the 
negative short-run effect of manufacturing sector output on the economic growth rate in Nigeria was significant. 

The short-run effect of the mining sub-sector on the Nigerian economy is negative, decreasing it by -0.086 
units. This implies that the mining sub-sector in Nigeria contributes negatively to the economy, but the negative 
contribution has not been found to be significant. 

There is a significant negative effect of electricity supply on economic growth in Nigeria. By implication, the 
short-term effect of electricity supply on the Nigerian economy is negative, decreasing it by -0.0302 units. The 
negative effect of electricity supply on the economy was very significant. 

The construction sub-sector decreases Nigeria’s economic growth rate significantly by -8.678 units. 
The effect of water, sewage, and waste management on the economy was negative and significant, which 

implied that there was a decreasing effect of water supply, sewage, and waste management on the economic growth 
rate in Nigeria, and the decreasing effect was significant. 

Labour force participation rate increased the economic growth rate in Nigeria by 0.254 units, but the positive 
effect it exerts on the economy was not significant. 

The intercept of the short-run model is positively estimated at 80.574, which indicates that, holding the 
industrialization variables constant, there will be a positive movement in the real GDP growth rate in the short 
run period. This underscores the driving force of the stochastic variables that affect economic growth positively but 
are not captured in the model. These stochastic variables are accounted for by the error term. 
 

4.1. Diagnostic Tests 
The diagnostic tests are additional tests that confirm the robustness of the model. These tests, along with their 

test statistics, are summarized as follows: 
1. The adjusted R-squared: The model has an adjusted R value of 0.605. This indicates that industrialization 

and its associated variables explain up to 60.5 percent of the changes in Nigeria's economic growth rate. By 
implication, manufacturing output, mining output, electricity supply, construction output, water supply and 
sewage/waste management, and labor force participation rate account for 60.5 percent of the changes in 
Nigeria’s economic development. This is a high explanatory coefficient. 

2. 1. Test for Autocorrelation: The Durbin-Watson statistic is estimated at 1.909. Going by the rule of thumb, 
there is no autocorrelation in the model since the Durbin-Watson statistic tends toward two. Hence, the data 
used in formulating the model is free from the problem of autocorrelation. In other words, the error terms 
observed in one year did not affect subsequent years. 

 

4.2. Test of Hypotheses 
The hypotheses formulated earlier in this research are tested under this sub-section. The hypotheses are stated 

in their null forms (H0). The decision rule is to reject the null hypothesis if the p-value of the t-statistic is less than 
the 0.05 significance level; otherwise, we accept the null hypothesis. 

Table 6 presents a summary of the hypotheses test at 5% level of significance. 
 
Table 6. Summary of the hypotheses test. 

Null hypotheses t-stat. (p-value) Decision 

H01: There is no significant relationship between 
manufacturing sector output and economic growth in 
Nigeria. 

t-statistic = -4.906 
(p-value) = 0.0059 

 

p-value < 0.05; null hypothesis is rejected.  

H02: There is no significant relationship between the 
mining sub-sector and economic growth in Nigeria. 

t-statistic = -1.839 
(p-value) = 0.0858 

 

p-value > 0.05; null hypothesis is accepted. 

H03: There is no significant effect of electricity supply 
on economic growth in Nigeria. 

t-statistic = -2.310 
(p-value) = 0.0394 

 

p-value < 0.05; null hypothesis is rejected. 

H04: Construction sub-sector output has no significant 
effect on Nigeria’s economic growth. 

t-statistic = -2.506 
(p-value) = 0.0242 

 

p-value < 0.05; null hypothesis is rejected. 

H05: Water supply, sewage, and waste management do 
not significantly affect Nigeria’s economic growth. 

t-statistic = -3.152 
(p-value) = 0.0349 

p-value < 0.05; null hypothesis is rejected. 

H06: There is no significant effect of labour force 
participation on Nigeria’s economic growth. 

t-statistic = 1.368 
(p-value) = 0.1913 

p-value > 0.05; null hypothesis is accepted. 

Source: Researcher’s computation from Eviews 9 software. 

 

4.3. Discussion of Findings 
The findings made in this research are in line with the research objectives. The specific objectives aimed to 

determine the effect of industrialization and its associated variables on the growth of the Nigerian economy. The 
model established a functional relationship between manufacturing, mining, construction, electricity supply, 
water/waste/sewage management, labour force participation, and economic growth in Nigeria. It is expected that 
the values of industrialization variables, with increased labour addition, should contribute to Nigeria’s economic 
development. Having analyzed the data, the findings are discussed extensively below. 

The long-run test confirmed the existence of a long-run relationship between industrialization and economic 
growth in Nigeria. The long run effect was also confirmed in the works of Okezie et al. (2017); Kida and Angahar 
(2020) and Isiksal and Odoh (2023). The implication is that industrialization exerts a long-term effect on the 
growth rate of Nigeria’s real gross domestic product, and as such, Nigeria should pursue long-term targets with 
respect to growing the country’s industrial sector. 



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In line with the established goals of the study, the outcome of the estimations suggested that the 
manufacturing sub-sector's production lowered the economic growth rate in the short term. Nonetheless, given its 
high likelihood value, the manufacturing sub-sector's production had a substantial detrimental impact on the 
economy. This suggests that the production of Nigeria's manufacturing sub-sector has not contributed to the 
necessary economic growth, which has considerably slowed down overall economic development. Okorontah and 
Uruakpa (2023) identified the poor operating environment of the manufacturing sub-sector as one of the factors 
that can slow down overall economic development. Furthermore, according to Banjoko, Iwuji, and Bagshaw (2012) 
the Nigerian manufacturing sector has significantly underperformed in comparison to its potential despite 
numerous policies and developmental initiatives implemented by successive civilian and military administrations 
since independence. 

Further analysis revealed that the mining sub-sector output decreased Nigeria's economic growth rate in the 
short term, but the decrease was not significant. This implies that as the mining sub-sector output changes, 
Nigeria’s economic growth tends to fall into negative territory, although the negative effect was not statistically 
significant owing to what Ekpo (2014) referred to as the miniature quantum of mining reserves in Nigeria. Ibeaja 
and Amadi (2024) found an insignificant effect of mining on the Nigerian economy. The mining sub-sector is not as 
large as the oil and gas sector, and this makes the effect of mining on the economy not significant. However, the 
negative effect portends great worry to the economy, as the mining sub-sector forms a substantial variable that 
drives the industrialization of any economy. From other economies, Ajmair (2014) found positive effects of mining 
and quarrying on the GDP of Pakistan. This is an indication that the Nigerian mining sub-sector has not shown 
the potential to drive the industrialization of the economy. 

Again, electricity supply showed a negative effect on economic growth. This implies that the expectation was 
not met for electricity supply, as the industrial sector still grapples with the problem of erratic electricity, which 
has affected its impact on the economy. World Bank (2013) noted that electricity is unreliable from the public 
power supplier in Nigeria, and the reliability is known to be less than 50% nationwide. Iwayemi (2019) and Odell 
(2019) found that strong demand and increased supply of electricity would stimulate increased income and higher 
living standards in Nigeria, but the reverse is the case. Ekpo (2014) submitted that electricity supply in Nigeria has 
not helped Nigeria to attain the required level of industrialization that can produce dynamic change in the 
economic structure of the country. The findings made in this research corroborate the majority of previous 
research, and this points to the fact that the electricity supply situation to the industrial sector in Nigeria has 
remained low over the years. 

The construction sub-sector showed a significantly negative effect on Nigeria’s economic growth in the short 
run, but the interesting fact is the significant negative effect of the construction sub-sector on the economy. This 
study does not agree with the findings of Attiah (2019) and Ajmair (2014) because their research was not carried 
out on the Nigerian economy. The Nigerian construction sub-sector as pointed out by Afolabi and Laseinde (2019) 
has been largely undermined by foreign multinationals, which add little or nothing to the government's 
industrialization drive. Efforts to localize the industry through local content enactments have so far not yielded the 
desired results, as the construction sub-sector still persists in its inverse relationship with the economic growth 
rate. 

While it is noteworthy and expected that water/sewage and waste management will affect the economy 
negatively, the significant effect this variable exerts on the economy was not expected. In contrast with the finding 
of Ajmair (2014) who posited that water supply distribution has a positive relationship with GDP of Pakistan, the 
Nigerian industrial sector has witnessed negative sewage conversion, thus leading to increased negative effects of 
waste on the economy. Isiksal and Odoh (2023) rightly pointed out that a mark of an industrialized economy is 
increased sewage and waste, but the expectation is that this will add value to the economy through conversion 
techniques. Thus, the negative effect shows that Nigeria is still far from being industrialized, as the economic 
growth rate drops with changes in water/sewage and waste management. 

The intervening effect of the labour force participation rate was the last objective of the study, and the results 
revealed that labour force participation in Nigeria adds value to the economy but not significantly. This implies 
that labour utilization by the industrial sector is not sufficient to drive the needed growth in the economy. This 
corroborates the findings of Usman and Lazarus (2021). Who asserted that the human capital and income levels 
have not reached the threshold to make industries contribute reasonably to economic growth in Nigeria. Also, 
Okezie et al. (2017) and Abomaye-Nimenibo (2021) both the found labour force has a negative impact on the real 
GDP in Nigeria in the short run. 

On the whole, the industrialization variables were found to have a jointly significant effect on the growth rate 
of the Nigerian economy, accounting for up to 60.5 percent of the changes in Nigeria’s economic growth efforts. 
There was no serial correlation of the error term in the model, thus confirming the suitability of the variables used. 
Additionally, the speed of adjustment of the model to the long-run equilibrium was estimated at 14.8 percent. The 
implication is that, given a steady increase of 14.8 percent in industrialization indices in Nigeria, the economy will 
experience an equilibrium long-run growth. 
 

5. Conclusion and Recommendations 
Based on the above revelation in this study, the study concludes that industrialization has a negative effect on 

the development of the Nigerian economy. This conclusion stems from the fact that the various indices of 
industrialization which were examined (manufacturing, mining, electricity supply, construction, and 
water/sewage/waste management) have negative effects on the economic growth rate of Nigeria. However, labor 
force participation exerted a positive effect on the growth rate of the economy, but this was not significant, which 
gives the impression of an insufficient utilization of available labor by the industrial sector. To achieve the level of 
economic development that is desired in Nigeria, the government needs to strive to consider one or a combination 
of the recommendations made below. 

 
 



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5.1. Policy Implications and Recommendations 
1. Given that the manufacturing sub-sector exerted a negative effect on the Nigerian economy, it implies that 

the Nigerian manufacturing sub-sector has deteriorated over the years, which culminated in the exit of major 
players in the industry. By implication, the Nigerian government will need to reform its industrial policies to 
promote manufacturing growth, such as providing incentives for investments, technology adoption, and 
innovations. 

2. In a similar manner, the mining/quarrying sub-sector negatively affected economic growth. The implication 
is that the government may need to strengthen environmental and social regulations in the mining sector to 
mitigate the negative externalities, such as environmental degradation, health impacts, and community 
displacement. 

3. Also, since electricity supply negatively affects economic growth, the government may need to reform the 
electricity sector to promote competition, efficiency, and investment in new generating capacity, transmission, and 
distribution infrastructure. 

4. Despite the fact that the relationship between the construction subsector and economic growth is not 
statistically significant, the negative relationship still has implications. In this case, the government may need to 
strengthen the monitoring and evaluation framework to track the performance of construction projects, identify 
areas of improvement, and ensure that projects are delivering the expected economic benefits. 

5. The government may need to invest in water supply infrastructure, upgrade the sewage system to reduce the 
risk of water pollution, and implement waste management reforms, including recycling programmes, waste-to-
energy initiatives, and proper disposal of hazardous waste. 

These key industrialization variables, when properly harnessed, can propel the needed growth in the economy. 
Since they exert a negative effect on the economy, there is bound to be retarded slowdown in the economy, which 
will extend to other sub-sectors. Achieving a highly industrialized economy is one where electricity supply is taken 
with utmost priority, the mining and quarrying sub-sector is made accountable for every output, and the 
construction sub-sector is largely localized. With increased industrialization comes increased waste and sewage 
generation. Thus, proper management of sewage and waste is paramount for electricity generation and increased 
access to factors that drive industrialization. Therefore, with the right policies and actions, Nigeria can achieve the 
desired level of industrialization. 

Government policies are shaped by research on specific aspects of the economy. This study has shown the 
effects of industrialization on the Nigerian economy within the period under review. The combination of 
industrialization variables has revealed that the industrial sector has not had the desired effect on the economy, and 
this knowledge is very necessary to drive policies that will reverse this trend. Thus, this study has contributed to 
the updated knowledge of policymakers on the industrial sector–economic growth nexus in Nigeria for an extended 
period from 1990 to 2024. 

 

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