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Nigeria manufacturing cost and policy stability challenges

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2026-08-20 13:52 UTC → 2026-08-22 20:56 UTC · added ~~removed~~

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.

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