Nigeria’s local defence manufacturers are urging the Federal Government to provide a transparent, multi-year procurement roadmap to de-risk the sector for private capital investment. The call for “demand visibility” comes as domestic firms struggle to secure the long-term financing required to scale production and reduce the country’s heavy reliance on imported security hardware.
The Defence Manufacturers Association of Nigeria (DMAN), a specialised sub-sector of the Manufacturers Association of Nigeria (MAN), argues that the current ad-hoc nature of government equipment orders makes it nearly impossible for private players to build sustainable business models. Without a clear signal of what the military and security agencies will require over the next five to ten years, commercial banks and private equity firms remain hesitant to commit the substantial capital needed for high-tech manufacturing plants.
The push for transparency follows the signing of the Defence Industries Corporation of Nigeria (DICON) Act 2023 by President Bola Tinubu. The legislation was designed to transform DICON into a more robust entity capable of partnering with the private sector to create a domestic military-industrial complex. However, industry stakeholders say that while the legal framework is now in place, the financial architecture to support it remains incomplete without guaranteed demand.
Security spending remains one of the largest items in the national budget. In the 2024 Appropriation Act, trillions of Naira were allocated to the security sector, yet a significant portion of this expenditure is directed toward foreign original equipment manufacturers (OEMs). Local manufacturers argue that if only 30% of this spend were redirected toward domestic contracts with visible timelines, it would trigger a massive influx of private investment into the manufacturing sector.
Private Capital Requires Long-Term Procurement Guarantees
Manufacturing in the defence sector is distinct from general consumer goods due to its high capital intensity, specialised technology requirements, and the singular nature of its customer base—the state. For a Nigerian firm to invest in a production line for armoured personnel carriers, ballistic vests, or tactical communication gear, it requires more than just a single contract; it needs a “rolling plan” that outlines future requirements.
Industry experts note that the lack of visibility forces local companies to operate on a project-by-project basis, which leads to inefficiencies and higher unit costs. A transparent procurement roadmap would allow companies to plan for raw material sourcing, workforce training, and research and development. It would also enable them to approach the Bank of Industry or commercial lenders with a predictable cash flow projection, which is a prerequisite for long-term industrial loans.
Furthermore, the volatility of the foreign exchange market has made the import-heavy model of security procurement increasingly unsustainable. By incentivising local production through demand visibility, the government can conserve foreign reserves. Manufacturers estimate that localising the production of basic military consumables and light hardware could save the country hundreds of millions of dollars annually while creating thousands of high-skilled jobs in engineering and technology.
The DICON Act 2023 also established the Defence Industry Equity Fund, which is intended to provide seed capital and support for domestic manufacturers. However, stakeholders emphasize that equity funds alone cannot sustain the industry if the primary buyer—the Ministry of Defence—does not communicate its long-term needs. They are calling for a formalised consultative platform where security agencies and manufacturers can align on technical specifications and volume requirements for the coming decade.
The global trend in defence industrialisation shows that countries which successfully built domestic capacity did so by providing “off-take guarantees” to private firms. In markets like Turkey and Brazil, the state acted as the anchor customer, providing the market certainty that allowed private firms to eventually compete in the international export market. Nigerian manufacturers believe they can replicate this model if the Federal Government shifts from emergency-driven purchases to a structured industrial policy.
The next step for the sector involves the full implementation of the DICON Act’s provisions regarding local content preference. Under the new law, the government is mandated to prioritise domestic manufacturers in its procurement processes, provided they meet the required standards. However, the industry is now waiting for the operational guidelines that will define how these preferences are applied and how small and medium-sized enterprises (SMEs) can integrate into the broader defence supply chain.
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