Quick Summary
- Industry location decisions impact production costs and profitability
- Key factors include raw materials, labor, power, transport, market, and government policies
- Industries can be market-oriented, raw material-oriented, or footloose
- Wrong location choices lead to business failure and economic losses
- Nigerian industries concentrate in Lagos, Port Harcourt, Kano, and Kaduna
What Determines Where Industries Are Located?
When companies decide where to build factories, they consider many factors. The right location helps reduce costs and increase profits. The wrong location can cause a business to fail.
Think about Dangote Cement. The company builds factories near limestone deposits in states like Kogi and Ogun. This reduces transport costs for raw materials. Similarly, the Nigerian Bottling Company has plants in major cities across Nigeria to be close to consumers.
Major Factors Affecting Industrial Location
1. Raw Materials
Industries that use heavy or bulky raw materials locate near their sources. This saves transport costs. For example:
- Steel mills near iron ore deposits (Ajaokuta Steel Company in Kogi State)
- Timber mills in forest areas (sawmills in Cross River and Ondo)
- Oil refineries near oil fields (Port Harcourt and Warri refineries)
- Cement factories near limestone quarries
2. Labor Supply
Industries need workers with the right skills. Areas with many skilled workers attract more industries. Lagos and Port Harcourt have many industries because they have educated workers.
Some industries need cheap labor. Textile factories in Kano and Kaduna benefit from the large population willing to work for lower wages.
3. Power Supply
Manufacturing needs electricity. Industries that use much power locate where power is cheap and reliable. Aluminum smelting and steel production need constant power.
Poor power supply in Nigeria forces many industries to use generators. This increases production costs. Some companies move to countries with better power supply.
4. Water Supply
Many industries need large amounts of water. Breweries, soft drink plants, and textile mills must be near water sources. The Nigerian Breweries plant in Ama uses water from local sources.
5. Transport Facilities
Good roads, railways, and ports help move raw materials in and finished goods out. Industries cluster around:
- Seaports (Lagos, Port Harcourt, Calabar)
- Airports (Ikeja Industrial Estate near Lagos Airport)
- Major highways (industries along Lagos-Ibadan Expressway)
- Railway stations (though Nigerian railways are now limited)
6. Market Access
Industries that make products that spoil quickly locate near consumers. Bakeries, ice cream factories, and newspapers must be close to their markets.
Products that are expensive to transport also locate near markets. Furniture factories and soft drink bottling plants serve local markets.
7. Government Policies
Government actions influence where industries locate:
- Tax incentives in specific zones (free trade zones in Calabar, Lagos)
- Industrial estates with ready infrastructure
- Import restrictions that encourage local production
- Environmental regulations that control where polluting industries can operate
8. Climate
Some industries need specific climate conditions. Tea processing needs cool temperatures. Rice milling works best in areas where rice grows.
9. Land Availability and Cost
Large industries need much space. They locate where land is cheap and available. This is why many industries move from expensive areas like Victoria Island to mainland areas with cheaper land.
10. Capital Availability
Starting industries requires money. Areas with banks and investors attract more industries. Lagos has many industries partly because it is Nigeria’s financial center.
Types of Industries Based on Location
| Type | Description | Examples |
|---|---|---|
| Raw Material-Oriented | Located near sources of raw materials to reduce transport costs | Oil refineries, cement factories, sawmills, sugar mills |
| Market-Oriented | Located near consumers to reduce distribution costs or serve perishable goods | Bakeries, breweries, soft drink plants, furniture factories |
| Footloose Industries | Can locate anywhere because raw materials are light and easily transported | Electronics assembly, jewelry making, software development |
| Port-Based | Located near seaports for easy import of materials and export of products | Import-dependent industries, export-oriented factories |
Industrial Concentration in Nigeria
Most Nigerian industries concentrate in a few areas:
Lagos State – Has over 60% of Nigeria’s industries. Benefits include the seaport, airport, large market, skilled workers, and good infrastructure.
Port Harcourt – Oil-based industries dominate. The refineries and petrochemical plants use crude oil from nearby oil fields.
Kano and Kaduna – Northern industrial centers with textile mills, tanneries, and food processing plants. They serve the large northern population.
Aba – Known for shoe making and garment production. Small-scale industries cluster here.
Problems of Industrial Location in Nigeria
- Poor Infrastructure – Bad roads, irregular power, and limited water supply increase production costs
- Concentrated Development – Too many industries in Lagos create overcrowding and pollution
- Regional Imbalance – Some states have few or no industries, limiting economic development
- Insecurity – Fear of attacks in some regions discourages investment
- Multiple Taxation – Different government levels impose various taxes, increasing business costs
- Port Congestion – Delays at Lagos ports increase costs for importers
Common Exam Mistakes
WAEC examiners report these common errors:
- Confusion between factors and importance – Students list “raw materials” without explaining WHY it matters (transport cost reduction)
- Vague answers – Writing “government policies” without specific examples like tax incentives or free trade zones
- Nigerian context missing – Using only foreign examples instead of Nigerian industries
- Poor distinction – Cannot differentiate between raw material-oriented and market-oriented industries
- Mere listing – Stating factors without explaining how they influence location decisions
Examiner’s advice: Always explain HOW each factor influences the location decision. Use specific Nigerian examples.
Practice Questions
Multiple Choice Questions
1. Which of these industries is most likely to be raw material-oriented?
a) Bakery
b) Cement factory ✓
c) Electronics assembly
d) Jewelry making
2. The main reason for industrial concentration in Lagos is:
a) Cheap labor
b) Cold climate
c) Good infrastructure and large market ✓
d) Government regulation
3. Footloose industries can locate anywhere mainly because:
a) They need no workers
b) Their raw materials are light and easily transported ✓
c) They produce no waste
d) Government allows them everywhere
4. Ajaokuta Steel Company was located in Kogi State mainly because of:
a) Large market
b) Cheap labor
c) Proximity to iron ore deposits ✓
d) Government order only
Essay Questions
1. Explain five factors that influence the location of industries. (10 marks)
Tip: Use the format “Factor – Explanation – Nigerian example” for each point. Don’t just list factors.
2. Distinguish between raw material-oriented and market-oriented industries, giving two examples of each from Nigeria. (8 marks)
Tip: First define each type, then explain why they locate where they do, then give examples.
3. Discuss four problems affecting industrial location in Nigeria and suggest solutions. (12 marks)
Tip: State problem, explain its impact, then suggest a practical solution. Examiners want problem-solution pairs.
Memory Aids
Remember key location factors using “LAMP TRICK”:
- Labor supply
- Access to raw materials
- Market proximity
- Power and water supply
- Transport facilities
- Regulations (government policies)
- Investment capital
- Climate conditions
- Kost of land (cost spelled with K)
Industry types: “Really Mad Footloose People” – Raw material-oriented, Market-oriented, Footloose, Port-based
Related Topics
- Types of Industries in Nigeria
- Manufacturing Industry
- Problems of Industrialization in West Africa
- Importance of Transportation to Industrial Development
- Natural Resources and Industrial Development