The Manufacturers Association of Nigeria (MAN) has said that while recent economic reforms have laid the foundation for long-term restructuring of the economy, the manufacturing sector has borne a significant share of the adjustment costs, resulting in rising production expenses, declining capacity utilization and job losses.
In an assessment of the impact of economic reforms over the past three years, MAN Director-General, Segun Ajayi-Kadir, described the period as one of “difficult but consequential economic transition,” marked by major policy measures aimed at correcting structural imbalances and positioning Nigeria for sustainable growth.
According to the association, the combined effects of fuel subsidy removal, exchange rate liberalization, electricity tariff increases and tight monetary policy significantly altered the operating environment for manufacturers.
MAN noted that the removal of fuel subsidy in May 2023 led to a sharp increase in logistics and distribution costs, which rose by more than 300 per cent within weeks.
The situation was compounded by the increase in electricity tariffs for Band A consumers from about ₦68 per kilowatt-hour to between ₦209 and ₦225 per kilowatt-hour, even as power supply remained unreliable due to recurring grid failures.
As a result, manufacturers increasingly relied on alternative energy sources to sustain operations. Expenditure on diesel, gas and petrol rose from ₦781.68 billion in 2023 to ₦1.11 trillion in 2024 and further climbed to ₦1.34 trillion in 2025.
The association said the mounting energy costs weakened industrial competitiveness and contributed to a decline in manufacturing capacity utilization, which fell from 61.3 per cent in the first half of 2025 to 57.7 per cent in the second half. More than 18,900 jobs were also affected during the period under review.
MAN further observed that the liberalization of the foreign exchange market delivered mixed outcomes. While the policy improved transparency and eliminated distortions in the forex market, the sharp depreciation of the naira significantly increased the cost of imported industrial inputs.
The exchange rate, according to the association, moved from about ₦463 to the dollar in June 2023 to ₦899 by December 2023 and later to 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, representing an increase of about 118 per cent. Manufacturing value-added also declined from $45.2 billion in 2023 to $21.84 billion in 2024.
Although the introduction of the Electronic Foreign Exchange Matching System improved market transparency, MAN said manufacturers continue to face inadequate access to foreign exchange through official channels, with less than half of industrial demand currently being met.
The association also highlighted the impact of tight monetary policy, noting that successive increases in interest rates between 2023 and 2024 raised borrowing costs for manufacturers and constrained industrial expansion.
As of March 2026, prime lending rates averaged 24.4 per cent, while maximum lending rates reached 33.8 per cent in several commercial banks. Credit to the manufacturing sector consequently declined from ₦10.88 trillion in February 2024 to ₦6.6 trillion by December 2025.
MAN further identified fluctuating customs duty assessments, driven by exchange rate volatility, as a major challenge. The association said frequent changes in duty obligations complicated business planning and contributed to higher costs for manufacturers importing machinery and raw materials.
Despite the challenges, the association acknowledged several policy initiatives that could support industrial recovery and long-term growth.
These include the Naira-for-Crude initiative, which it said has helped ease foreign exchange pressures in the downstream petrochemical and plastics value chain, as well as fiscal measures that exempted pharmaceutical raw materials and medical devices from VAT and excise duties.
MAN also welcomed provisions in the 2025 Tax Reform Act, including withholding tax exemptions, expanded VAT deductibility on fixed assets and services, phased reductions in Companies Income Tax, incentives for research and development, and relief measures for small and medium-sized industries.
The association further praised ongoing efforts to harmonize levies across states, the implementation of the Nigeria Industrial Policy, the Nigeria First local content framework, and the launch of the National Single Window platform, describing them as important steps toward strengthening domestic manufacturing and improving trade efficiency.
Looking ahead, MAN urged the government to move beyond macroeconomic stabilization and focus on industrial recovery through targeted interventions that provide affordable access to foreign exchange, concessionary financing for manufacturers, stable electricity supply and predictable trade policies.
Ajayi-Kadir stressed that Nigeria’s long-term economic resilience depends on a strong manufacturing sector capable of creating jobs, boosting local value addition and producing competitively for domestic and export markets.
He said the current reforms could still deliver meaningful industrial transformation if implementation becomes more coordinated, responsive to productive sectors and focused on addressing structural constraints facing manufacturers.
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