# Nigeria manufacturing cost and policy stability challenges

> Live situation record from CLSTR: https://clstr.news/situations/nigeria-manufacturing-cost-challenge
> Updated: 2026-08-21T01:45:25.000Z. Sources: 15. Developments: 4.

Nigerian manufacturers face production costs up to ten times higher than Asian rivals, threatening their competitiveness within the African Continental Free Trade Area (AfCFTA). Kamar Bakrin, Executive Secretary of the National Sugar Development Council, noted that factories spend approximately ₦1.34 trillion annually on self-generated power, with electricity costs reaching nearly 30 cents per kilowatt-hour when using diesel generators, compared to 8–10 cents in Vietnam and China.

Working-capital rates in Nigeria remain high at 27% to 35%, significantly exceeding the 3% to 9% seen in China and Vietnam. Additionally, Nigeria ranks 88th of 139 on the World Bank Logistics Performance Index. While recent macroeconomic reforms have reportedly halved inflation and raised foreign-exchange reserves to $51 billion, manufacturing capacity utilization has slipped to 57.7%.

At the 59th Annual General Meeting of the Manufacturers Association of Nigeria (MAN), industry leaders expanded the call for reform. MAN President Otunba Francis Meshioye highlighted that while the sector saw a 3.29% expansion in the first quarter of 2026, growth is jeopardized by policy instability, regulatory bottlenecks, and smuggled goods. Stakeholders are now demanding predictable fiscal rules, such as clarity on the Nigeria Tax Act 2025, the settlement of foreign exchange forward obligations, and a prioritization of locally produced goods in public procurement.

Recent data from the Nigerian Economic Summit Group (NESG) indicates that manufacturing has become the primary driver of Nigeria’s industrial output, with its share rising to 50.1 percent in the first quarter of 2026, up from 28.2 percent in 2010. The sector also remains the largest industrial employer, accounting for 76.5 percent of total industrial employment in 2023. However, NESG CEO Dr. Tayo Aduloju warned that Nigeria’s strategic decisions regarding monetary policy and fiscal reforms have significant ripple effects on regional stability and investor confidence within blocs like ECOWAS and the AfCFTA.

## Claims

- Nigerian manufacturers pay between 15 and 30 cents per kilowatt‑hour for electricity, compared with 8 cents in Vietnam and 10 cents in China. (corroborated by 4 sources)
- Nigerian manufacturers spent about ₦1.34 trillion generating their own electricity last year. (corroborated by 4 sources)
- Nigerian manufacturers face interest rates of 27 % to 35 % on working‑capital loans, versus about 9 % in Vietnam and 3 % in China. (corroborated by 4 sources)
- Nigeria ranks 88th out of 139 countries on the World Bank Logistics Performance Index. (corroborated by 4 sources)
- Manufacturing contributes about 8 % of Nigeria’s Gross Domestic Product. (corroborated by 4 sources)
- Factory capacity utilization in Nigeria has fallen to 57.7 %. (corroborated by 4 sources)
- Nigeria has a domestic market of about 230 million people and duty‑free access to 1.4 billion consumers under the African Continental Free Trade Area. (corroborated by 4 sources)
- Bakrin presented a four‑point plan to reduce production costs in Nigeria’s manufacturing sector. (corroborated by 4 sources)

## Timeline

### 2026-08-21: Nigeria: Manufacturing leads industrial growth as NESG warns of regional policy impacts

The Nigerian Economic Summit Group reports that manufacturing is now the largest contributor to Nigeria’s industrial output and employment, while warning that national policy decisions impact African regional-t

2 sources. https://clstr.news/cluster/nigeria-manufacturing-leads-industrial-growth-as-nesg-warns-of-regional-policy-impacts

### 2026-08-19: Manufacturers in Nigeria demand policy stability and cheaper power

Nigerian manufacturers are calling for lower electricity costs, policy stability, and improved infrastructure to sustain the sector's 3.29 per cent growth recorded in early 2026.

2 sources. https://clstr.news/cluster/manufacturers-in-nigeria-demand-policy-stability-and-cheaper-power

### 2026-07-26: Nigeria urged to slash manufacturing costs to stay competitive in Africa

Kamar Bakrin of Nigeria's NSDC calls for a four‑point plan to cut electricity, financing and logistics costs, warning high production expenses could cost the country its African market share.

8 sources. https://clstr.news/cluster/nigeria-urged-to-slash-manufacturing-costs-to-stay-competitive-in-africa

### 2026-07-26: Nigeria’s factories face up to ten‑fold higher production costs than Asian rivals

Nigeria’s factories pay 2‑10× more for electricity, credit and logistics than Vietnam and China, costing ₦1.34 trn in power alone, with working‑capital expenses up to 35 % and low logistics scores, hampering a

4 sources. https://clstr.news/cluster/nigerias-factories-face-up-to-tenfold-higher-production-costs-than-asian-rivals

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Cite as: Nigeria manufacturing cost and policy stability challenges. CLSTR, https://clstr.news/situations/nigeria-manufacturing-cost-challenge