By Staff Reporter
The Manufacturers Association of Nigeria (MAN) has said that while recent economic reforms undertaken by the Federal Government were necessary to address structural imbalances in the economy, the policies have imposed significant costs on the manufacturing sector, resulting in rising production expenses, declining capacity utilization and job losses.
In an assessment of the country’s economic reforms over the past three years, MAN noted that measures such as fuel subsidy removal, foreign exchange market liberalization, electricity tariff adjustments and tighter monetary policies have fundamentally altered the operating environment for manufacturers.
According to the association, the removal of fuel subsidy in May 2023 led to an immediate surge in logistics and distribution costs of more than 300 percent, while electricity tariff increases for Band A consumers significantly raised operating expenses without corresponding improvements in power supply.
As a result, manufacturers increasingly depended on alternative energy sources to sustain operations. MAN disclosed that expenditure on diesel, gas and petrol rose from ₦781.68 billion in 2023 to ₦1.11 trillion in 2024 and further increased to ₦1.34 trillion in 2025.
The association said the rising cost burden weakened industrial competitiveness and contributed to a decline in manufacturing capacity utilization, which dropped from 61.3 percent in the first half of 2025 to 57.7 percent in the second half of the year. More than 18,900 jobs were also affected during the review period.
MAN further highlighted the impact of foreign exchange reforms on industrial production. While the unification of exchange rate windows improved transparency, the sharp depreciation of the naira significantly increased the cost of imported raw materials and industrial inputs.
The exchange rate moved from about ₦463 to the United States dollar in June 2023 to ₦899 by December 2023 and later reached approximately ₦1,535 by December 2024. Consequently, the cost of imported raw materials surged from ₦3.04 trillion in 2023 to ₦6.64 trillion in 2024.
The association also revealed that manufacturing value-added declined sharply from $45.2 billion in 2023 to $21.84 billion in 2024, while access to foreign exchange at official market windows remained insufficient to meet industrial demand.
In addition, MAN said high interest rates resulting from tight monetary policies constrained industrial investment. As of March 2026, prime lending rates averaged 24.4 percent, while maximum lending rates reached as high as 33.8 percent in some commercial banks.
The group noted that credit to the manufacturing sector fell from ₦10.88 trillion in February 2024 to ₦6.6 trillion by December 2025, making expansion and long-term investment increasingly difficult for manufacturers.
Despite the challenges, MAN acknowledged several government initiatives that could support industrial recovery. These include the Naira-for-Crude programme, tax incentives for pharmaceutical manufacturers, provisions contained in the 2025 Tax Reform Act, efforts to harmonize taxes and levies across states, and the promotion of local content through the Nigeria First policy framework.
The association also welcomed the introduction of the National Single Window platform, which it said could improve trade efficiency and reduce delays at the nation’s ports.
MAN stressed that while the reforms have laid the foundation for long-term economic restructuring, government attention must now shift toward industrial recovery, job creation and improving the competitiveness of local manufacturers.
The association urged policymakers to provide affordable foreign exchange for productive sectors, concessionary financing for industries, stable electricity supply and predictable trade policies to support sustainable growth.
“Nigeria cannot achieve sustainable economic prosperity without a strong manufacturing base,” MAN Director-General, Segun Ajayi-Kadir, said, emphasizing that the country’s long-term resilience depends on its ability to produce competitively, create jobs and expand industrial value addition.
