• Manufacturer’s FX losses hit N1.62tr as cost of imported raw materials surge by 118%
• ‘Only 37% of 200,000km road network motorable’
The Director-General, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, has raised alarm over 18,000 jobs lost in 2024 due to the increasingly hostile business environment in the country.
He also noted unsold goods inventory, which rose by 87.5 per cent to N2.14 trillion in 2024, as a result of low purchasing power, inflation and rising production costs.
Ajayi-Kadir, who was the keynote speaker at the 2025 BusinessDay Manufacturing Conference yesterday, said the alarming decline was evident in the country’s ranking of 97th in the Global Competitive Industrial Performance Index, an uninspiring 44 places below South Africa.
Unfortunately, he said, despite the sector’s importance to the Nigerian economy, its full potential remains untapped, operating below its capacity due to macroeconomic headwinds; deficient infrastructure facilities and inadequacy of supportive government policies and incentives.
He described the conference theme, ‘Unlocking Nigeria’s Manufacturing Potential: Strategies for Sustainable Growth Amid Economic Turbulence’ as apt and timely, as the prevailing economic downturn hit the sector the most.
“It is now facing the combined storm of FX losses, rising raw material costs, high energy prices, multiple taxation, escalated borrowing costs, infrastructural deficits and policy uncertainties.
“It is not surprising that the sector’s growth has been on a decline for years, falling to 1.40 per cent in 2023 and further dropping to 1.38 per cent in 2024. The sector’s quarter-on-quarter growth reflects a similarly negative trend,” he noted.
Further decrying the deplorable road network in the country, which he noted hampered logistics, commerce and manufacturing, he said despite a road network of 200,000km, only 37 per cent is in good condition, impacting logistics and market access. “Fifty-three checkpoints exist between Mile 2 and Seme border, the 20km Seme to Badagry route has 34 checkpoints. The poor transport system keeps escalating logistics costs, making Nigerian manufacturers less competitive.”
Insecurity has elevated business risks, increased costs and made the investment environment uncertain. Agro-allied industrial activities have remained challenged by insurgent activities and farmer-herder clashes.”
The manufacturing sector, he pointed out, is the engine of Nigeria’s industrialisation, yet its current performance remains sub-optimal. “Its performance had remained lacklustre due to numerous familiar binding constraints like unstable exchange rate, inadequate power supply/high cost of energy, high inflation, insecurity, multiplicity of regulatory agencies and high regulation costs, high interest rate and poor access to credit, deficient infrastructure, high logistics cost, unfavourable trade policies and low patronage.”
He added that their data shows that manufacturing capacity utilisation plummeted from 73.3 per cent in 1981 to 57 per cent in 2024 and that contribution to the economy shrunk from 29.9 per cent to 8.6 per cent over the same period. Real growth reportedly decelerated from 14.7 per cent in 2014 to 1.38 per cent in 2024, while non-oil export contributions have nose-dived from 82.37 per cent in 2019 to 25.13 per cent in 2024.
Lamenting access to credit, he said financing remains a hurdle, with scarce long-term funds and average borrowing costs from commercial banks in 2024 increasing to 35.5 per cent, from 28.06 per cent in 2023, compared to eight per cent in South Africa.
Lamenting policy instability, which reportedly continues to undermine their operations, he said dumped and smuggled goods captured significant market share in sectors like textiles and electronics in 2024, undercutting local prices and causing revenue loss for manufacturers. The flood of substandard, second-hand products threatens local manufacturers. “It is not surprising that the sector’s growth has been on a decline for years, falling to 1.40 per cent in 2023 and further dropping to 1.38 per cent in 2024. The sector’s quarter-on-quarter growth reflects a similarly negative trend.”
Calling for action to address these challenges and unlock the growth potential of the manufacturing sector, he said the government holds the primary responsibility for creating an enabling environment to unlock the sector’s potential, a task that requires strategic interventions across infrastructure, fiscal policy, and regional integration issues.
He urged the government to imbibe effective engagement and inclusion in policy processes; gazette the ‘Nigeria First Policy’; institute mechanisms for gathering and disseminating export market intelligence; provide a stable and predictable policy environment; urgently improve infrastructure and logistics networks, and fast-track the Ajaokuta-Kaduna-Kano (AKK) gas pipeline.(Guardian)
