EFFECT OF CAPACITY UTILIZATION ON PRODUCTIVITY OF FOOD INDUSTRY IN NIGERIA

Abstract

The food industry plays a crucial role in Nigeria's economic growth, and understanding the relationship between capacity utilization and productivity is essential for its development. This study investigates the impact of capacity utilization on productivity within the food industry of Nigeria. The research objective is to examine impact of capacity utilization on the productivity of the food industry in Nigeria and identify the factors influencing this capacity utilization. Utilizing quantitative methods, the study examines data collected from 272 observations sourced from the World Bank Enterprise Survey 2014 Data. Multiple linear regression analysis is employed to model the relationship between capacity utilization and productivity while controlling for potential variables. The result of the study reveals a strong positive relationship between employee numbers and sales in the Nigerian food industry. However, there is no significant relationship between capital investment and sales. Efficient material utilization is crucial for higher productivity. The overall regression model is statistically significant, explaining approximately 26.6% of the variability in sales. The study also examines Total Factor Productivity (TFP) against Capacity utilization, revealing that capacity utilization does not significantly impact TFP in the food industry. The wide range of TFP values within each group suggests diverse operational characteristics or external factors affecting productivity. The regression results show no strong evidence to suggest a significant relationship between capacity utilization and TFP in the food industry in Nigeria. The educational attainment of managers and firm age do not appear to have a statistically significant impact on TFP in these models. In conclusion, the results indicate a lack of significant relationship between capacity utilization and total factor productivity (TFP) in Nigeria’s food industry, despite some negative associations. Moreover, variables such as educational attainment of managers and firm age do not show a statistically significant impact on TFP. The findings suggest the need for longitudinal analysis integrating quantitative and qualitative methods to better understand the dynamic relationship between capacity utilization and productivity. Additionally, comprehensive assessments of operational efficiency, workforce training, and resource utilization are recommended to inform interventions aimed at enhancing productivity within Nigeria’s food industry.