The cement industry has grown to be an important activity in the economy with Nigeria becoming home to the world’s largest emerging cement companies. The industry is largely dominated by two firms controlling over 80% of the domestic market – Dangote Cement and Lafarge WAPCO Cement Plc. The demand for cement is seasonal in nature, and it is expected to continue to grow most especially as there exists a huge housing deficit and the increasing demand to use cement in road construction.The industry’s prospects for growth has attracted investments from both domestic investors as well as foreign multinational companies. While the foreign investors are acquiring existing investments, domestic investors such as Dangote Group and BUA Group have complemented existing capacity by establishing new plants. Over the last five year, there has been aggressive drive towards the modernization and expansion of cement plants which have seen the capacity of the industry multiplied, currently at over 45million tones, and efficiency improved. With this in progress, the industry is expected to begin export to neighbouring West African markets by the end of 2019 putting Nigeria on the brink of meeting its target of local demand and making the country a net exporter of cement.

The textile garment and footwear industry accounts for about 2% of the national GDP. The textile industry was once ranked as the second largest in Africa after Egypt’s with over 250 factories operating above 50% installed capacity. At its peak, the industry averaged an annual growth of 67%, and employed about 25% of the workforce in the manufacturing sub-sector, fed by locally grown cotton.The industry is currently estimated to be able to produce about 1.4 billion different pieces of textile products. With huge demand for clothing by a fast-growing population, the industry has been unable to meet domestic demand for African prints, shirting, bed sheets, furnishing fabrics towels, embroidery lace, garments, table and bed linen, guinea brocades, wax prints, java prints, jutes, fishing nets, among many other textile products.Nigeria is noted to produce cotton, silk and other fibers, which are primary materials for the textile industries. On annual basis, area under cotton cultivation is about 0.2-0.6 million hectares, largely in the Savannah areas of the country. Annual production is in the range of 300,000 tons of seed cotton or 110,000 tons of lint (about 607,735 bales of cotton lint) and 400,000 tons of seed cotton. Production is dominated by small scale farmers, with farm sizes ranging from 3-5 hectares all under rainfed ecologies. Seed cotton yield ranges from 0.6 to 1.5 tons per hectare. About 98% of the crop is grown to Gossypium hirsutum, while the balance is grown with G. barbadense.There is however a dearth of cotton milling factories in the country resulting in the exportation of these raw cotton. The implication of this is that the textile industry in country now relies on imported processed raw materials.Although the textile industry might have lost some of its prominence, the potential of being a leader on the continent is still apparent. To this end, several initiatives, such as the N100bn Textile and Garment (CTG) Intervention Fund managed and disbursed by the Bank of Industry (BOI), are in place to revamp the industry and safe guard it from extraneous factors.

The food processing industry is another vastly developing industry in the Nigerian manufacturing sub-sector. The industry has grown at an average of 3% over the last 5 years contributing an annual average of 4% to the GDP, employing about 5% of the local workforce. Although, the industry is composed of mainly small and medium enterprises, there is a consistent upsurge of new entrants of multinational food companies and an aggressive expansion of existing operations geared to meet the demand of the local market. This has been motivated by the apparent expansion of the middle-class armed with rising incomes and growing awareness for food safety and dietary quality prompting demand for low-carbohydrate, low-fat, and even sugar-free food and beverages.Some of the new investments on the horizon includes Dangote Group’s $800 million investment in dairy production, consortium of Vicampro Farm, BlackPace and Kiremko planned investment in potato processing factory in Plateau and Kaduna expected to cost about US $ 45 million with a processing capacity of 30,000 to 40,000 tons, the plant will be the largest in West Africa, and a host of large bakeries, biscuit and waffle factories are increasingly being built. These investments would complement existing investments by Cadbury Nigeria, Unilever Nigeria, De-United Foods Industries, FrieslandCampina WAMCO Nigeria, and many more.Despite the increasing investments by local processors and continued upsurge of multinational companies into the industry, bulk of the intermediate and processed inputs utilized are still imported. The increasing importation of food, beverage and packaging technology, 15% in 2017 alone, there is an air of relief that most of these imports would be soon be available locally, more so that the basic raw materials, agricultural produce such as cocoa, peanuts, palm oil, corn, rice, sorghum, millet, cassava, yams, rubber, cattle, fish among many others, are available locally.

Nigeria’s industrial aspiration is hinged on the implementation of the Nigeria Industrial Revolution Plan (NIRP) which philosophy is to build Nigeria’s competitive advantage, to broaden the scope of industry, and accelerate expansion of the manufacturing sub-sector. NIRP establishes cross cutting interventions that address competitiveness of the entire manufacturing sub-sector. The NIRP will ensure that Nigeria becomes:

1. the preferred manufacturing hub in West Africa;
2. the preferred source for supplying low and medium-technology consumer and industrial goods domestically and regionally.

Government is not unaware of the major challenges inhibiting the growth and development of the manufacturing industry; there is a huge commitment to ensuring that Nigeria generates a minimum of 10,000MW of power and ensure effective distribution of this power before the end 2023. Government is also committed to removing all non-fiscal barriers to investment and ensuring a competitive business environment that would promote free entry and exit of investors irrespective of nationality.

Government has deliberately designed investment incentives to support private sector participation in the sector. While some of these incentives are in form of tax holiday, exemptions, and reliefs, there are many more that leverage on specific government policies, performance of the companies as well as relevant international investment treaties. Some of these are:

1. Income tax relief for a period of three years and which can be extended for a period of one year and thereafter another one year or for one period of two years – Pioneer Status Incentives
2. Zero Import Duty: Zero percent import duty tariffs (custom, excise and value added) for import of agricultural equipment and agro-processing equipment.
3. Exemption of interest from tax on loans granted to agricultural activities.
4. Avoidance of double taxation agreement which eliminates double taxation with respect on income and capital gains.
5. Investment promotion and protection agreement provides reciprocal baseline protections for investments.
6. Nigeria qualifies for the Africa Growth and Opportunity Act (AGOA).

For more information, please refer to the Compendium of Investment Incentives in Nigeria.