Nigerian manufacturers faced significant challenges in 2025, with estimated spending on alternative power reaching N1.35 trillion, a 23% increase from N1.1 trillion in 2024. This surge in energy costs has eroded resources needed for expansion and technology investment, according to the Manufacturers Association of Nigeria (MAN). The association's president, Francis Meshioye, warned that the cost of self-generation was becoming unsustainable and could push the manufacturing sector towards collapse.
The 23% increase in alternative energy spending comes amid factory closures and production cuts, highlighting the broader cost pressures confronting manufacturers. Meshioye cited energy costs, foreign exchange exposure, financing costs, logistics, regulatory charges, and weak consumer purchasing power as major factors affecting production costs and investment decisions. He emphasized that these challenges were affecting the sector's ability to invest and expand.
Nigeria's continued dependence on imported raw materials is another significant challenge facing the manufacturing sector. In the first half of 2025, the country imported approximately N3.53 trillion worth of raw materials, with about N1.72 trillion sourced from Asia. Meshioye warned that increasing production of finished goods without developing domestic sources of raw materials and intermediate inputs would constrain local value addition.
The MAN president highlighted the need for reliable and affordable energy, access to finance, availability of industrial inputs, efficient logistics, regulatory predictability, productivity, and the ability of firms to invest and scale as key indicators of the success of Nigeria's national industrial policy. He cited Central Bank data showing that manufacturing capacity utilisation increased from 51.33% in the first quarter of 2025 to 57.50% in the second quarter.
However, Meshioye cautioned against interpreting the improvement in capacity utilisation in isolation from the rising costs confronting manufacturers. He called on the Federal Government to accelerate implementation of the industrial policy, arguing that policy adoption alone would not translate into industrial growth without effective execution. Meshioye also urged the government to enforce Executive Orders 003 and 005, which demonstrate its commitment to promoting domestic production through the patronage of locally manufactured goods.
Professor Ayo Omotayo, Director-General of the National Institute for Policy and Strategic Studies (NIPSS), emphasized that Nigeria could not achieve its economic ambitions without a stronger manufacturing sector. He noted that manufacturing had the potential to contribute as much as 25% of Nigeria's Gross Domestic Product, compared with its current contribution of about 3.3%. Omotayo identified the cost and availability of electricity as major constraints to manufacturing, saying the sector needed cheaper and more reliable energy to reduce production costs.
Omotayo and Meshioye stressed the need for collaboration between government, manufacturers, and universities to develop locally produced components for industries and improve the business environment. They also highlighted the importance of positioning Nigeria as an industrial hub, with competitive production, deeper local value addition, stronger domestic supply chains, technology investment, and access to markets within Africa and beyond, particularly under the African Continental Free Trade Area (AfCFTA) agreement.
Key points
- Nigerian manufacturers spent N1.35 trillion on alternative power in 2025, a 23% increase from 2024.
- The manufacturing sector faces significant challenges, including energy costs, foreign exchange exposure, and dependence on imported raw materials.
- The success of Nigeria's national industrial policy depends on consistent implementation and effective execution.
