Firm-Learning and Productivity in Nigeria's Manufacturing Sector

Abstract

ABSTRACT: The manufacturing sector plays a strategic role as a major contributor to economic growth and development. However, the harsh business environment in Nigeria has constrained learning and capability building in the Nigerian manufacturing sector. The present state of the manufacturing sector underscores the need for firm-level learning and strategic policy actions. This paper utilized data from the Enterprise Survey Panel covering the periods 2007, 2009, and 2014/2015 to investigate firm learning and productivity in the Nigerian manufacturing sector. Case study illustrations were also undertaken to further provide insights into the links between learning variables and the productivity of selected firms in the sector. Data were analyzed using descriptive statistics; dynamic panel model (DPM) via ordinary least squares (OLS) and General Method of Moments (GMM) techniques. The results of the estimation show there is a positive and significant relationship between export participation lagged by one period (t-1) and the current firm performance. A one-period lag of the learning variables, namely: skills and training increased the productivity of firms. The case study illustrations revealed that major learning capabilities include customer feedback; through employees, staff training/seminars/workshops, and supplier feedback. The paper provides evidence to conjecture that the STI mode of learning, which involves formal research and development (R&D) in firms is not deep enough, and that domestic firms have less productivity relative to firms with some proportion of foreign ownership. Also, some of the constraints to learning and productivity are an unstable regulatory environment, poor infrastructure and high cost of doing business. The paper recommends both formal and informal modes/mechanisms of learning are important to ensure improved productivity of manufacturing firms in Nigeria Also, learning opportunities may differ within and across manufacturing subsectors. Industry regulators or agencies should organize to provide a forum for firms and relevant stakeholders to regularly interact on learning experiences to learn from each other and collaborate to address obstacles to productivity.