Successes and Failures of Industrial Policies in Nigeria: The Cases of the Cement, Textiles, and Iron and Steel Industries

Salihu, Hamisu

Abstract

Under the same clientelist political settlement, industrial policies have been designed and implemented in the cement, textile, and iron and steel industries in Nigeria. However, although these policies were designed and implemented under more or less the same power configuration, there is a puzzling divergence in their outcomes. While the cement industrial policy (the BIP) succeeded in transforming Nigeria from a net cement importer to a self-sufficient producer, policies aimed at transforming the textile and iron and steel industries have failed to achieve their objectives. Setting out to unravel the puzzle of these divergences in policy outcomes using the political settlement framework and insights from the concept of rents space and the technological capability theory, this research made some interesting findings. While the support of the political leadership to a particular policy was found to be crucial to policy performance, regardless thereof, three factors emerged to be very critical for industrial policy performance, and therefore appear to have accounted for the differences in policy outcomes in the three industries under study. These factors are: (i) the nature of the requirements, adoption, and implementation of appropriate learning/capabilities/routines in particular industries (ii) the relative capabilities of entrepreneurs in an industry and (iii) the importance of entrepreneurs in particular industries to ruling elites in terms of contributions to building/maintaining ruling coalitions in power. Thus, based on data gathered from structured/semi-structured interviews, archives, and other secondary sources, it was found that the successful policy outcome in the cement industry differs from the failures in the textile and iron and steel industries because of the following three major reasons/factors: One, the cement industry’s requirement, adoption and implementation of learning/organizational capabilities/routines are relatively simple. Two, cement entrepreneurs possessed the requisite` financial, investment and organizational capabilities to drive successful transformation. Three, cement entrepreneurs were very important to ruling elites for political/campaign financing from the regulatory rents that they generate in the industry and elsewhere. In contrast, the adoption and implementation of organizational learning/capabilities/routines in the textile and iron and steel industries were, compared to the cement, found to be relatively complex. In particular, vertical integration policies in these two industries seek to make semi-independent sub-sectors with different structural weaknesses, capabilities requirements, productivity gaps and efficiency levels link vertically with one another with concomitant contagious consequences. Finally, there were some pockets of active and quite successful private industrialists in both textile and iron and steel industries who possessed capabilities that are comparable to the cement entrepreneurs’. However, being largely of foreign origins, and operating in industries where rents largely come from market competition, rather than from the discretionary (in)actions of government, these active/successful small-scale private textile and iron and steel industrialists had very little surplus rents to contribute to political/campaign financing, and hence, little influence to exert on policy design and enforcement in their respective industries.

Citation

Salihu, H. Successes and Failures of Industrial Policies in Nigeria: The Cases of the Cement, Textiles, and Iron and Steel Industries. (Thesis). SOAS University of London

• Thesis Type: Thesis
• Deposit Date: May 9, 2023
• Publicly Available Date: May 9, 2023
• DOI: https://doi.org/10.25501/SOAS.00039472
• Additional Information: Number of Pages : 388
• Award Date: Jan 1, 2023