CAPACITY UTILIZATION AND ITS INFLUENCE ON THE EXPANSION OF NIGERIA’S MANUFACTURING INDUSTRY

Abstract

This study investigated the impact of manufacturing capacity utilization on growth of manufacturing industry in Nigeria from 1995 to 2023. Using an ex-post facto research design, data from the 2023 edition of the Central Bank of Nigeria's statistical bulletin was analysed through Ordinary Least Squares (OLS) regression. The study treats aggregate manufacturing sector output as the dependent variable and capacity utilization of food and beverages, cement, and oil refining as independent variables. Findings reveal significant positive impacts of food and beverages sector capacity utilization, a negative but significant impact of cement sector utilization, and a positive significant impact of oil refining sector utilization on manufacturing output in Nigeria. Overall, the study concludes that manufacturing capacity utilization plays a crucial role in manufacturing industry growth in Nigeria. Recommendations include investing in innovative technologies and skills development in the food and beverages sector, regulatory reforms and infrastructure investment in the cement sector, modernizing oil refineries and energy diversification, and strengthening local supply chains to support manufacturing capacity utilization and stimulate industry and economic growth