Kaduna turns to private investment to boost value-added production

The manufacturing industry, which was an important component of Kaduna’s economy in the 1970s, has seen a steady decline in the decades since. The local authorities have been keen to kick-start light manufacturing, particularly in the agro-allied industries, and expand activity in the solid minerals sector, which are expected to become a key driver of growth. However, industry and manufacturing remain comparatively small components of the economy, contributing around 10% to the state’s GDP. The government is looking to new private sector investment and a restructuring of state-owned enterprises to revive the sector.

Textiles

Kaduna was one of the main sites of the once-thriving Nigerian textiles industry. However, a combination of outdated infrastructure, unreliable electricity, competition from cheaper imports and inflationary pressures brought about by rising oil prices eroded the strength of the industry. Textile manufacturing is the largest segment of the industrial sector in the state, but between 2013 and 2017 the industry generated between N35bn ($93.5m) and N85bn ($227m) in revenue per year, equivalent to around 2-4% of the state’s GDP.

In recent years federal and state governments have implemented incentives for investors which, combined with Kaduna’s general infrastructural improvements, could result in a sustainable revival. In 2019 the Central Bank of Nigeria (CBN) announced a N100bn ($276m) injection with the aim of creating 2m jobs in the northern states, and state and federal ministries are set to collaborate on achieving self-sufficiency in cotton production and textile materials by 2022. Moreover, in March 2019 the CBN restricted access to foreign exchange for all forms of textile materials – an intervention sparked by the $4bn spent annually on imported textiles and clothing in the hope that this measure would spur industrial development through import substitution.

A number of domestic and international textile companies have expressed interest in establishing facilities in Kaduna. In October 2019 the federal government launched the DICON-SUR Corporate Wears Nigeria garment factory, which produces uniforms for the armed forces and other security agencies. The project aims to create 1000 jobs by 2021. In December 2019 Nasir Ahmad El-Rufai, the governor of Kaduna, received a delegation from Kimona Manufacturers of South Africa to discuss their plans for garment manufacturing in Kaduna. Meanwhile, Dutch textiles company Vlisco proposed a 400-ha textiles park in Kaduna, which would bring cotton farming, spinning, weaving, printing and garment making to the state, and create as many as 200,000 jobs.

Automobiles

Kaduna has hosted the Peugeot Automobile Nigeria assembly plant since 1972. The company, previously a joint venture of Peugeot and the federal government, was privatised in 2006. In recent years production has been in decline, but officials are working to revive the industry through investment promotion, infrastructural development, improved standards and skills, and market development. Furthermore, in February 2021 the National Automotive Design and Development Council announced it would build three public-private partnership-led automotive industrial parks, one of which will be housed in Kaduna.

In June 2018 the PSA Group announced it would open a new assembly plant in Kaduna in the first quarter of 2019. Launched with $10m in equity and $5m of working capital, the Peugeot Automobile Nigeria (PAN) company imports parts to assemble the Peugeot 301 sedan and sells the cars chiefly in northern Nigeria, with plans to scale up production to 10,000 vehicles annually. The investment value at completion was N1.9bn ($5.1m). In October 2020 NESBITT Investment Nigeria acquired PAN, with plans to inject $150m into the firm to boost operations.