…For developing economies like Nigeria, historical evidence confirms that industrial take-off requires a measured degree of protectionism.
By Dr. Muda Yusuf
MON NOV 03 2025-theGBJournal| Industrialization is central to Nigeria’s long-term economic growth, job creation, and national sovereignty. History and global experience show that no country has achieved industrialization through indiscriminate trade liberalization.
The Centre for the Promotion of Private Enterprise (CPPE) advocates for strategic protectionism—a calibrated policy approach that safeguards domestic and emerging industries while building competitiveness and self-sufficiency.
The recent 15% import duty on refined petroleum products represents a positive policy proposition. When complemented with broader industrial support measures, it can catalyze industrial expansion, conserve foreign exchange, create jobs, and promote economic resilience.
Nigeria’s excessive dependence on imports over the past few decades has weakened its productive base, eroded competitiveness, and exposed the economy to external shocks.
Notably, sectors that enjoyed measured protection—such as cement, flour, and beverages—have recorded remarkable domestic growth and value addition.
Background and Rationale
Industrialization remains the cornerstone of sustainable economic transformation, employment generation, and national prosperity. For developing economies like Nigeria, historical evidence confirms that industrial take-off requires a measured degree of protectionism.
Asian success stories—China, South Korea, India, and Malaysia—built their industrial strength through inward-looking strategies during their formative decades. They protected infant industries, promoted local content, and developed domestic value chains before gradually opening up to global competition.
Even the United States, the world’s largest economy, has recently adopted protectionist industrial policies to bolster its manufacturing base.
Nigeria’s prolonged dependence on imports has created deep structural distortions.
The absence of effective protection and inadequate support for local producers have discouraged investment and led to decades of deindustrialization.
The oil and gas sector epitomizes this failure: decades of refined product importation have drained foreign reserves, weakened fiscal stability, and eroded economic sovereignty.
CPPE therefore advocates for a strategic protectionist framework, particularly in key industrial sectors, as the foundation for Nigeria’s industrialization drive.
The Case for Strategic Protectionism
Industrialization is a gradual process that begins with consolidating the domestic market, progresses through regional expansion, and culminates in global competitiveness. Strategic protectionism provides the enabling environment for this evolution.
By shielding emerging industries from premature exposure to unfair competition, strategic protectionism encourages domestic investment, fosters local value addition, and allows firms to achieve efficiency and scale before competing globally.
For Nigeria, this approach is not economic isolation or the creation of monopolies. Rather, it is a self-strengthening strategy to ensure the domestic economy develops sufficient capacity to compete effectively on the global stage.
The Oil and Gas Sector: A Case Study
The continuous importation of petroleum products over the past two decades has imposed immense costs on the Nigerian economy. The consequences include sustained pressure on foreign exchange reserves, fiscal instability, and the collapse of domestic refining.
The 15% import duty on refined petroleum products—petrol and diesel—is therefore a welcome development and a progressive and corrective measure.
This modest protection will provide the policy support needed for domestic refineries such as Dangote Refinery, NNPCL refineries, and emerging modular refineries to thrive, restore Nigeria’s refining capacity, and reduce foreign exchange exposure.
Comparative Sectoral Perspective
Nigeria’s industrial history shows that sectors which received structured protection recorded transformative outcomes.
-Flour Milling: Combined import charges exceed 70%, fostering backward integration and domestic capacity expansion.
-Agro-Processing: Average import tariffs above 30% have stimulated local production and employment.
-Pharmaceuticals: Import restrictions on selected product groups have promoted health sovereignty and encouraged local manufacturing.
In this context, a 15% duty on refined petroleum products is modest, balanced, and necessary to restore Nigeria’s refining capacity and fiscal resilience.
Leveling the Playing Field for Domestic Producers
Exposing local industries to global competition without addressing structural constraints is not desirable and legitimate competition—it is policy-induced disadvantage.
Nigerian manufacturers face high energy costs, weak infrastructure, limited access to finance, inefficient ports, and complex regulatory frameworks.
Producers in advanced economies, by contrast, enjoy subsidized energy, efficient logistics, and low-interest financing. Without correcting this imbalance, Nigerian firms cannot compete fairly. Genuine competition requires comparable production conditions, not a contest between subsidized imports and under-supported domestic producers.
Industrial and Macroeconomic Payoffs
Properly designed protectionist measures deliver broad developmental dividends. They:
-Stimulate industrial growth and job creation
-Conserve foreign exchange and stabilize the naira
-Promote backward integration and local value addition
-Enhance macroeconomic and fiscal resilience
-Encourage innovation, technology transfer, and long-term competitiveness
Ultimately, strategic protectionism supports national self-reliance while laying the foundation for globally competitive industries.
Managing the Transition to Local Efficiency
Concerns about short-term price increases are valid but transitional. The long-term solution lies not in liberalizing imports but in improving domestic efficiency.
To ensure protection yields sustainable benefits, government must complement it with:
-Fiscal incentives and targeted subsidies
-Access to low-cost financing
-Reliable and affordable energy supply
-Strategic infrastructure investment
-Streamlined regulatory processes
As domestic industries scale up, production costs will decline, leading to price stabilization and consumer welfare gains.
Building a Balanced Competition Model
Nigeria should adopt a competition model that prioritizes domestic production over import dependence. Producers should compete with fellow producers, not with importers. Both indigenous and foreign investors should be encouraged to produce locally through clear, consistent, and performance-based policies.
This approach—successfully applied in the cement, flour, and beverage industries—can be replicated across sectors to achieve self-sufficiency and export readiness within a decade.
Policy Recommendations
To institutionalize a balanced and growth-oriented protectionist framework, CPPE recommends the following:
-Sustain the 15% import duty on refined petroleum products to protect and incentivize investment in domestic refining.
-Complement tariff protection with industrial support policies, including low-cost financing, energy access, and improved logistics to prevent price escalation
-Expand backward integration incentives in petrochemicals, steel, agro-processing, and pharmaceuticals.
-Strengthen monitoring and evaluation to ensure protection fosters productivity, innovation and price moderation.
-Transition to export competitiveness once domestic industries attain stability, ensuring protection is performance-based and time-bound.
Conclusion
Nigeria’s journey to sustainable industrialization must be anchored on strategic, time-bound protectionism, not indiscriminate liberalization. No country has industrialized through unrestrained exposure to imports. The 15% tariff on refined petroleum products is a forward-looking policy that can transform Nigeria’s industrial landscape if reinforced with complementary reforms.
This is not merely about a single refinery—it is a sector-wide proposition that supports all current and future domestic investors in refining and related industries.
Protectionism, when pragmatic and disciplined, is not about closing borders. It is about building domestic strength for global competitiveness. The goal is not to shut out the world, but to empower Nigeria to engage it from a position of strength.
Dr. Muda Yusuf is the Director / Chief Executive Officer Centre for the Promotion of Private Enterprise (CPPE)
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