ABUJA, Nigeria (VOICE OF NAIJA)-The Manufacturers Association of Nigeria has said recent economic reforms introduced by the administration of President Bola Tinubu have significantly raised operating costs for manufacturers, with spending on alternative energy climbing to N1.34tn in 2025 and placing additional pressure on industrial performance.
Despite the challenges, the association said the reforms have created a foundation for long-term economic restructuring and urged the Federal Government to prioritise industrial recovery and growth.
In a document assessing the impact of the reforms on the manufacturing sector MAN stated that manufacturers have shouldered a substantial portion of the adjustment costs arising from policies such as fuel subsidy removal, exchange rate liberalisation, electricity tariff increases and tight monetary conditions.
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The Director-General of MAN, Segun Ajayi-Kadir, said the reforms fundamentally changed the operating environment for manufacturers and led to sharp increases in production costs.
According to the association, the removal of fuel subsidy in May 2023 triggered a more than 300 per cent increase in logistics and distribution costs within weeks, while higher electricity tariffs for Band A consumers added to production pressures.
“Although these measures were designed to stabilise the macroeconomy and restore investor confidence, they simultaneously triggered unprecedented increases in production costs across the industrial sector,” Ajayi-Kadir stated.
MAN noted that despite electricity tariffs rising from about N68 per kilowatt-hour to between N209 and N225 per kilowatt-hour, power supply remained unreliable because of recurring grid collapses and system disruptions.
As a result, manufacturers increasingly depended on diesel, gas and premium motor spirit to sustain operations.
“As a result, manufacturers continued to rely heavily on alternative energy sources such as diesel, gas and premium motor spirit to sustain operations. Expenditure on alternative energy surged from N781.68bn in 2023 to N1.11tn in 2024 and further increased to N1.34tn in 2025,” Ajayi-Kadir stated.
The association said the growing energy costs weakened industrial competitiveness and reduced manufacturing capacity utilisation.
“This development severely weakened industrial competitiveness and contributed to declining manufacturing capacity utilisation, which dropped from 61.3 per cent in the first half of 2025 to 57.7 per cent in the second half of the same year,” Ajayi-Kadir stated.
MAN also disclosed that the difficult business environment contributed to the loss of more than 18,900 jobs during the period under review.
On foreign exchange reforms, the association said exchange rate liberalisation delivered mixed outcomes. While exchange rate unification improved transparency, the sharp depreciation of the naira significantly increased the cost of imported industrial inputs.
According to MAN, the exchange rate moved from about N463/$ in June 2023 to N899/$ by December 2023 and later to approximately N1,535/$ by December 2024.
Consequently, the cost of imported raw materials rose from N3.04tn in 2023 to N6.64tn in 2024, representing an increase of about 118 per cent.
The association further revealed that manufacturing value added declined sharply from $45.2bn in 2023 to $21.84bn in 2024, while access to foreign exchange through the official market remained inadequate for many manufacturers.
MAN also identified high interest rates as a major constraint to industrial growth, noting that prime lending rates averaged 24.4 per cent as of March 2026, while maximum lending rates reached 33.8 per cent in some commercial banks.
“Under such conditions, long-term industrial investment became increasingly difficult and commercially unattractive,” Ajayi-Kadir stated.
The association added that credit to the manufacturing sector fell from N10.88tn in February 2024 to N6.6tn by December 2025.
Despite its concerns, MAN commended several government initiatives, including the Naira-for-Crude programme, tax incentives for pharmaceutical manufacturers, the 2025 Tax Reform Act, the Nigeria Industrial Policy, the Nigeria First framework and the National Single Window platform.
According to the association, these measures could support industrial recovery if effectively implemented.
“Overall, MAN believes that the reforms undertaken over the past three years have laid the groundwork for long-term economic restructuring. However, macroeconomic stabilisation must now transition into industrial recovery and growth,” Ajayi-Kadir stated.
The association called on the Federal Government to ensure access to affordable foreign exchange for productive activities, provide concessionary financing for industrial investments, guarantee stable electricity supply and maintain predictable trade policies.
“Nigeria cannot achieve sustainable economic prosperity without a strong manufacturing base. The country’s long-term resilience depends on its capacity to produce competitively, create jobs locally and expand industrial value addition,” Ajayi-Kadir stated.