The Nigerian manufacturing sector is facing a significant crisis, characterized by declining competitiveness both domestically and internationally. The Manufacturers Association of Nigeria Export Promotion Group (MANEG) has sounded the alarm, citing a sharp 40.43% drop in manufacturing exports in the first quarter of 2025, a stark contrast to the previous quarter. While a year-on-year increase of 9.58% was recorded, MANEG argues that this doesn’t negate the seriousness of the quarterly decline, which they believe points to deep-seated structural challenges threatening the sector’s very survival. MANEG attributes this decline to a confluence of unfavorable economic factors, including exorbitant borrowing costs exceeding 25%, a challenging operational landscape burdened by overlapping tariffs, persistent port bottlenecks, and unpredictable foreign exchange volatility. These factors, they argue, are severely hampering the ability of Nigerian-made goods to compete effectively, both within the country and in the global market.
The concerns raised by MANEG are echoed by other stakeholders in the industry. The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, has previously lamented the dwindling productivity and export performance of its members, a concern now substantiated by the latest NBS data. Industry experts, including former Chartered Institute of Bankers President, Professor Segun Ajibola, warn that without swift and decisive policy interventions, Nigeria risks further marginalization in global trade and a decline in manufacturing-driven job creation. Ajibola highlights three crucial factors influencing the manufacturing sector’s performance: the operating environment, cost profile, and the nature of the business. He argues that an unfriendly operating environment, characterized by unfavorable government policies, environmental challenges, and difficult market conditions, stifles manufacturing growth.
Ajibola emphasizes the importance of a cost-efficient operating environment for manufacturers to thrive. He argues that regardless of how conducive the business environment might be, if manufacturers cannot operate profitably, they will inevitably struggle. He further explains that the nature of the business also plays a crucial role. While some manufacturing concerns produce essential goods that remain in demand regardless of economic fluctuations, others produce luxury or semi-luxury items whose demand is directly tied to consumer disposable income. A decline in disposable income therefore negatively impacts the performance of such manufacturers. This multifaceted analysis underscores the complex interplay of factors affecting the manufacturing sector.
Furthermore, Ajibola criticizes the over-concentration of attention on the federal government, arguing that state and local governments are not doing enough to support local industries. He condemns the practice of some sub-national governments that impose excessive taxes and create obstacles for businesses operating within their jurisdictions. He calls on these sub-national entities to shift their focus towards nurturing local manufacturing concerns, suggesting strategies that encourage growth and development rather than hindering it. This decentralized approach, he believes, is crucial for fostering a robust manufacturing sector across the country.
Ajibola also advocates for a more proactive and collaborative approach from MAN. He urges the association to partner with other organized private sector members, including the Lagos Chamber of Commerce and Industry, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, and the Small and Medium Enterprises Development Agency of Nigeria. This collaboration, he suggests, should focus on establishing a dedicated research department tasked with producing evidence-based policy documents that can effectively influence government decision-making. This strategic approach, he believes, would empower the private sector to play a more impactful role in shaping policies that support the growth and development of the manufacturing sector.
In response to the alarming decline in manufacturing exports, MANEG has called on the Federal Government to implement urgent economic reforms. They specifically urge a review of monetary and trade policies, including a reassessment of interest rates, rationalization of tariffs, and expedited implementation of cost-saving initiatives such as the Presidential Compressed Natural Gas initiative. These measures, they believe, are essential to revive the ailing sector, restore its competitiveness, and unlock its potential for job creation and economic diversification. The urgency of this call underscores the precarious situation facing the Nigerian manufacturing sector and the need for swift and decisive action to avert a deeper crisis.
