The purpose of this study was to develop approaches to enhance the innovation capabilities, and in effect, the competitiveness of local industries. Multi-stage sampling procedure was used to select 250 manufacturing firms. It was discovered that innovation is highly prevalent in the Nigerian manufacturing industry but it is incremental in nature and pre-conditioned by poor absorptive capacities. It was also found out that industrial activity in the northern part of the country is low but very high in the southern part. The South-West accounts for about 70% of manufacturing activity. It was suggested that the National Bureau of Statistics (NBS) play an important role in ensuring the compilation of a valid and periodically updated business register and that government should demonstrate greater commitment through increased funding to enable larger samples, and through legislation that would improve the provision of relevant information by business concerns.