The Manufacturers Association of Nigeria (MAN) has said that economic reforms introduced by President Bola Tinubu’s administration have significantly increased operating costs for manufacturers, with spending on alternative energy rising to N1.34tn in 2025.
The association, however, acknowledged that the reforms have laid the foundation for long-term economic restructuring. It urged the Federal Government to focus on industrial recovery and growth.
In a document assessing the impact of recent economic reforms on industrial performance, MAN stated that manufacturers have carried a large share of the adjustment burden resulting from key policies. These policies include fuel subsidy removal, exchange rate liberalisation, electricity tariff adjustments and tight monetary policy.
The Director-General of MAN, Segun Ajayi-Kadir, said the reforms have changed the operating environment and triggered sharp increases in production costs.
According to him, the removal of fuel subsidy in May 2023 caused logistics and distribution costs to rise by more than 300 per cent within weeks. He added that higher electricity tariffs for Band A consumers further worsened production challenges.
Although the policies were designed to stabilise the economy and boost investor confidence, Ajayi-Kadir said they also led to unprecedented increases in production costs across the industrial sector.
MAN noted that electricity tariffs increased from about N68 per kilowatt-hour to between N209 and N225 per kilowatt-hour. Despite the increase, power supply remained unstable due to recurring grid failures and system disruptions.
As a result, manufacturers continued to depend heavily on diesel, gas and premium motor spirit to keep their operations running.
The association revealed that spending on alternative energy increased from N781.68bn in 2023 to N1.11tn in 2024 before reaching N1.34tn in 2025.
MAN said the growing energy burden weakened industrial competitiveness and contributed to a decline in manufacturing capacity utilisation. Capacity utilisation dropped from 61.3 per cent in the first half of 2025 to 57.7 per cent in the second half of the year.
The association also disclosed that the difficult operating environment led to significant job losses, affecting more than 18,900 workers during the review period.
On foreign exchange reforms, MAN said the liberalisation of the forex market produced mixed results. While exchange rate unification improved transparency, the depreciation of the naira sharply increased the cost of imported industrial inputs.
The association noted that the exchange rate moved from about N463 per dollar in June 2023 to N899 per dollar by December 2023. It later rose to approximately N1,535 per dollar by December 2024.
Consequently, the cost of imported raw materials increased from N3.04tn in 2023 to N6.64tn in 2024, representing a rise of about 118 per cent.
MAN further revealed that manufacturing value added fell from $45.2bn in 2023 to $21.84bn in 2024. It added that inadequate access to foreign exchange at the official market remained a major challenge for manufacturers.
The association also blamed high interest rates for limiting industrial expansion. According to MAN, 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.
Ajayi-Kadir said such borrowing conditions made long-term industrial investment difficult and unattractive.
MAN added that credit to the manufacturing sector declined from N10.88tn in February 2024 to N6.6tn by December 2025.
Despite the challenges, the association commended several government initiatives. These include 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 MAN, these initiatives could support industrial recovery if properly implemented.
The association maintained that the reforms introduced over the past three years have created a foundation for long-term economic restructuring. However, it stressed that macroeconomic stabilisation must now lead to industrial recovery and sustainable growth.
MAN called on the Federal Government to provide affordable foreign exchange for productive activities, concessionary financing for industrial investments, stable electricity supply and predictable trade policies.
Ajayi-Kadir said Nigeria cannot achieve sustainable economic prosperity without a strong manufacturing base. He added that the country’s long-term resilience depends on its ability to produce competitively, create jobs locally and expand industrial value addition.
