The Nigerian manufacturing sector is currently facing one of its most challenging periods, compounded by several economic reforms introduced by President Bola Ahmed Tinubu’s administration. Key among these reforms is the liberalisation of the foreign exchange rate, the introduction of high electricity tariffs—which the Manufacturers Association of Nigeria (MAN) has described as one of the highest in the world—and the implementation of petrol subsidy removal. These measures have placed significant financial pressure on businesses within the sector.
In addition to these challenges, manufacturers are grappling with high inflation and interest rates. These factors have collectively worsened the sector’s performance, leading to significant losses. According to Zacch Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), the situation is dire, with manufacturers declaring a combined loss of ₦1.7 trillion in 2024. This loss means the FIRS might not be able to collect taxes from these companies for up to a decade, as businesses are legally allowed to carry forward their losses.
A recent report by the National Bureau of Statistics (NBS) further underscores the sector’s struggles. The report revealed that the manufacturing sector’s contribution to Nigeria’s Gross Domestic Product (GDP) declined by 20.95% in the first half of 2024 compared to the same period in 2023. The sector’s share of GDP fell from 16.04% in Q4 2023 to 12.68% in Q2 2024. Additionally, nominal GDP growth for the sector dropped to just 1.91% year-on-year in Q2 2024, a sharp decline from the 29.90% growth recorded in 2023.
Industry leaders have voiced concerns over these developments. Mr. Dele Kelvin Oye, National President of the National Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), highlighted several contributing factors to the sector’s decline. These include the rising cost and availability of raw materials, energy, and foreign exchange, alongside weak domestic demand due to high inflation and declining consumer purchasing power. Oye also cited inadequate infrastructure, such as poor transportation networks and unreliable power supply, as further challenges.
Experts like Professor Akpan Hogan Ekpo of the University of Uyo have argued that the manufacturing sector has historically underperformed, contributing less than 15% to Nigeria’s GDP since 1963. He attributed the sector’s poor performance to a lack of political will to implement sound policies, the neglect of small and medium-sized enterprises (SMEs), and the over-reliance on crude oil exports. Ekpo stressed the need for comprehensive reforms to boost the sector’s growth, including better access to foreign exchange, improved industrial infrastructure, and reduced production costs.
The Director General of the Nigeria Employers’ Consultative Association (NECA), Mr. Adewle-Smatt Oyerinde, also emphasized the detrimental impact of government policies on the sector. He pointed to the liberalisation of the foreign exchange market as a key factor driving up production costs and hampering profitability. Oyerinde warned that unless immediate measures are taken to stabilize the naira and reduce the cost of raw materials and energy, the manufacturing sector—and by extension, Nigeria’s broader economic ambitions—will remain at risk of further decline.
