By MOSHOOD OSHUNFUREWA

This symptom has fully emerged. Nigeria’s indigenous industrialisation policy has failed. This failure is not the product of any single policy misstep but the systematic collapse of a six-decade-old structural architecture. This is a consequence of energy costs that devour manufacturing margins, foreign exchange controls that choke off access to production inputs, corruption that converts industrial support funds into private estates, and infrastructure decay that makes any locally produced good structurally uncompetitive against imports. When Chinese traders move from wholesale into retail and directly capture the customer networks of Nigerian local merchants, this is not an isolated market event. It is the inevitable outcome of a domestic industrial capacity so thoroughly dismantled that foreign capital, cheaper, faster, better capitalized, simply fills the vacuum.

What is more dangerous is that this crisis is being distorted by ethnicised narratives. The protesters at the Lagos International Trade Fair were largely Igbo traders, and some political actors are happy to redirect the confrontation into an “Igbo versus Chinese” story, burying the real structural culprits, a political economy that makes it impossible for local producers to survive while imported goods flow in unimpeded. When Chinese manufacturers can mass-produce at a fraction of Nigerian costs and sell directly to Nigerian consumers, Nigerian artisans and SME owners are not facing a competitor. They are facing an entire industrial ecosystem they were never permitted to build.

The crisis of Nigerian manufacturing begins as an energy crisis. The Association of Power Generation Companies reports installed capacity above 15,500 megawatts, but the grid transmits only about 4,500 megawatts. Between 2,500 and 4,000 megawatts of generated power are wasted daily. Eighty-five million Nigerians live without electricity. A tailor earning N4,000 a day spends N3,000 of it on generator fuel. Nigerian businesses and households spend roughly $23 billion annually on diesel and petrol for self-generation, and the World Bank estimates the economic cost of unreliable electricity at $26–29 billion.

This energy cost structure means that any locally manufactured good carries a “power tax” from the moment it is conceived—a tax Chinese manufacturers never pay. Chinese factories enjoy stable grid electricity; Nigerian factories must build their own power plants. When Chinese goods enter the market at scale-driven low costs, Nigerian producers are not in a fair fight. They are in a war whose outcome was fixed before the first shot.

Foreign exchange controls are the second strangulation. Between 2015 and 2023, the Central Bank of Nigeria imposed eight years of FX controls and 43 import bans in an attempt to force local production. The result was catastrophic: firms could not obtain the foreign exchange needed to import raw materials and machinery, and productive capacity fell rather than rose. Between 2023 and 2024, over 85 percent of Nigeria’s manufactured goods trade was imported; by the first half of 2025, that figure reached 93.3 percent. Protectionism did not midwife indigenous industry. It accelerated deindustrialisation—because Nigeria had never built the productive capacity that could substitute for imports in the first place.

The third strangulation is institutional corruption. Successive industrial support schemes, from the Anchor Borrowers’ Programme to various manufacturing intervention funds, have fallen into the same trap: funds intercepted at disbursement, subsidies routed to politically connected firms rather than genuinely productive SMEs, and the ordinary artisan and micro-entrepreneur never once appearing on the policy radar. The nation’s fundamental problem is not a lack of vision but “a deficit of institutional capacity and execution discipline” to convert vision into results. Stolen wealth is displayed in the offshore properties of Nigerian public officials, while the resources that should have flowed into industrialisation never reach production.

The Lagos trade fair protests exposed a deeper economic logic. Chinese traders initially entered the Nigerian market as wholesalers, using China’s scale advantages to supply Nigerian retailers. But as local retail capacity shrank and local merchants lost the ability to accumulate capital, Chinese traders moved directly into retail—renting shops, building warehouses, copying customer phone numbers from waybills, and undercutting local merchants by selling straight to final consumers.

This is not simple “unfair competition.” Chinese retailers possess advantages Nigerian merchants simply cannot match: direct factory sourcing that bypasses every intermediary; trade finance from Chinese banks; and a renminbi-naira currency swap (however underutilised at under 10 percent) that lets them sidestep dollar shortages. The Nigerian merchant, by contrast, faces naira depreciation inflating import costs, administrative barriers to FX access, and direct price pressure from Chinese retailers.

The trade structure is damning. In 2024, Nigeria imported ?14.15 trillion worth of goods from China while exporting only ?2.99 trillion, imports accounting for over 82 percent of bilateral trade. Nigeria’s exports to China are concentrated in oil, gas, sesame, and raw ore; its imports from China are synthetic textiles, telephones, machinery, and electrical equipment, higher-value manufactured goods. This structure fits dependency theory’s “centre-periphery” relationship exactly: the periphery supplies raw materials, the centre supplies finished goods, and value flows systematically from periphery to centre.

When Chinese traders extend from wholesale into retail, they are extracting the last remaining surplus of that dependency relationship. The Nigerian merchant’s position in the chain is emptied out entirely: he cannot compete upstream with Chinese factories, nor downstream with Chinese retailers. The protesters’ anger is real, but it has been aimed at the wrong target.

That the Lagos protesters were predominantly Igbo traders is no accident. Igbo Nigerians occupy a disproportionately important position in Nigeria’s trading networks, from Lagos to Aba to Onitsha, Igbo merchants form the backbone of indigenous retail and distribution. When Chinese retailers began directly eroding that network, the group hit hardest was precisely the Igbo trading class.

Yet some political forces moved swiftly to redefine an economic protest as an “Igbo versus Chinese” ethnic conflict. This narrative diversion is not innocent. It pulls public attention away from the real structural questions, why can’t Nigeria’s power system supply factories? Why do FX controls strangle local production? Why do industrial support funds end up in private pockets? And reduces everything to a xenophobic story of foreigners stealing local business.

The response of Nigeria-China Investment Club president Chidi Uleli is telling: he concedes “yes, it is a legitimate concern,” then points the solution at “Nigerian businessmen should come together and establish cottage industries,” as if the problem were insufficient individual effort rather than the collapse of an entire industrial ecosystem. This argument ignores a basic fact: building a factory in Nigeria means providing your own generator, solving your own FX, and absorbing the cost of infrastructural collapse, costs Chinese manufacturers never bear.

The failure of Nigeria’s indigenous industrialisation policy ultimately manifests as a new form of dependency. Nigeria no longer the direct political control of the colonial era, but a lock-in at the lowest rung of the global value chain through asymmetries in trade structure, financial mechanisms, and productive capacity. China’s trade surplus with Nigeria reached $23 billion in 2024, but that is only the surface number. The deeper problem is that Nigeria has lost the possibility of building indigenous manufacturing capacity in the foreseeable future.

Every protectionist attempt has ended in failure because the thing being protected does not exist. You cannot protect an uncompetitive industry; you can only protect the corpse of an industry that is already dead. Nigeria’s textile industry once had 167 factories and 500,000 workers; today most of those factories are industrial ruins. When the Senate calls for “reviving the textile industry,” it confronts an empty shell with no electricity, no cotton supply chain, no financing channels.

Chinese small and medium enterprises are taking over Nigeria’s retail space, not because Chinese people are smarter or more hardworking than Nigerians, but because China’s industrial ecosystem—from power to logistics to finance to technology, allows them to produce goods at costs Nigerians cannot match. Nigerian merchants cannot build cottage industries to compete in their own country, because the cost of building industry in their own country is absurdly high.

The fate of the ordinary Nigerian is now bound to this dependency structure. Every Chinese-made good they buy reinforces an economic order that makes local production permanently unviable. And those Igbo traders protesting on the streets of Lagos should aim their anger elsewhere, at the Nigerian rulers who institutionalised corruption, abandoned infrastructure, and turned industrial policy into a tool of political patronage. Chinese traders are merely the final beneficiaries of this failed system, not its architects.

•Moshood Oshunfurewa, a public affairs analyst writes from Lagos. He can be reached via

Moshoodho2025@gmail.com | 08035936663