The Nigerian manufacturing sector is grappling with a significant decline in export performance, a situation exacerbated by prevailing economic challenges, particularly the high interest rates imposed by banks. The Manufacturers Association of Nigeria (MAN) has voiced serious concerns over the detrimental impact of the 27.5% monetary policy rate on the sector’s viability. Data reveals a precipitous drop in manufacturing exports, plunging from a peak of N1.04 trillion in the third quarter of 2024 to a mere N294.43 billion in the first quarter of 2025. This represents a staggering N746.38 billion decrease and underscores the severity of the situation. The decline is attributed to a confluence of factors, including the high cost of borrowing, which cripples manufacturers’ ability to access necessary capital for operations and expansion.
While there has been a year-on-year growth of 9.58% in manufacturing exports compared to the first quarter of 2024, the overall trend since the fourth quarter of 2024 has been consistently downward. This decline reflects the persistent challenges faced by manufacturers, despite the country’s impressive N5.17 trillion trade surplus. The MAN has highlighted a range of constraints hindering the sector’s growth, including an unstable exchange rate, inadequate power supply and high energy costs, persistent inflation, insecurity, excessive regulatory burdens, and limited access to credit. These factors combine to create a hostile business environment that discourages investment and stifles productivity.
The high interest rate environment is particularly damaging to manufacturers, as it significantly increases the cost of borrowing for essential operations and expansion. This financial burden hinders their ability to compete effectively in both domestic and international markets. The MAN argues that the current monetary policy, while aimed at curbing inflation, is having unintended negative consequences on the manufacturing sector. The association emphasizes the need for a more balanced approach that considers the specific needs of this critical sector. The shrinking access to affordable credit forces manufacturers to scale back operations, postpone investments, and ultimately contributes to the decline in exports.
The decline in manufacturing exports is a concerning trend that has significant implications for the Nigerian economy. The manufacturing sector plays a crucial role in job creation, economic diversification, and overall economic growth. The closure of 767 manufacturing companies and the loss of over 18,000 jobs in 2024 alone paint a stark picture of the sector’s struggles. The MAN attributes these losses to the prevailing hostile business environment, reiterating the urgent need for policy interventions to address the multifaceted challenges facing manufacturers. The continued decline in exports threatens to further exacerbate these problems, leading to more job losses and diminished economic activity.
Despite the overall decline in manufacturing exports, Nigeria’s total exports experienced growth in the first quarter of 2025. Total exports reached N20.59 trillion, representing a 7.42% increase compared to the same period in 2024 and a 2.92% increase compared to the fourth quarter of 2024. Non-oil exports contributed N3.17 trillion, demonstrating a modest improvement compared to the previous quarter. However, the significant decline in manufactured exports undermines the overall positive performance of the export sector and highlights the urgent need to address the challenges plaguing the manufacturing industry.
A deeper analysis of the trade data reveals specific trends in imported and exported manufactured goods. While the value of imported manufactured goods decreased by 11.35% compared to the previous quarter, it experienced a substantial year-on-year increase of 30.90%. This indicates a growing reliance on imported manufactured goods, which further underscores the need to strengthen the domestic manufacturing sector. The top exported manufactured goods included unwrought aluminum alloys, dredgers, and cathodes, primarily destined for Asian, African, and European markets. The data also highlights the significant import of motorcycles, polypropylene, and herbicides, indicating areas where domestic production could be potentially enhanced to reduce reliance on imports. Addressing the challenges faced by the manufacturing sector is crucial for reversing the decline in exports, promoting economic growth, and creating a more sustainable and resilient economy.
