The Manufacturers Association of Nigeria (MAN) has raised alarm over the Federal Government’s ambition of achieving a $1 trillion economy by 2026, indicating that this goal is slipping further out of reach due to the underwhelming performance of the country’s manufacturing sector. In a recent statement, MAN President Francis Meshioye highlighted the third quarter GDP growth rate of 3.46 percent for 2024, which although an improvement from the previous quarter’s 3.19 percent, remains significantly lower than the 6 percent annual average required to meet the government’s economic target. Meshioye underscored the growing dominance of the services sector in contributing to GDP, which grew by 5.19 percent and accounted for over half of the country’s economic output, emphasizing that this trend poses a critical challenge to Nigeria’s industrialization agenda.
The observation made by Meshioye reveals a troubling imbalance in the economy. As the services sector continues to thrive, employment and production within the manufacturing sector are faltering, raising concerns about the nation’s ability to curtail foreign exchange (forex) demand, enhance value addition, and expand export earnings. According to the Nigerian Bureau of Statistics (NBS), the manufacturing sector recorded a meager growth rate of 2.18 percent in Q3 2024, contributing only 8.21 percent to GDP compared to 8.42 percent in the same timeframe a year prior. These figures exemplify a concerning trend where key sectors vital for industrial growth are lagging far behind, jeopardizing the overall economic strategy of the country.
Meshioye attributed the sluggish performance of the manufacturing sector to numerous macroeconomic challenges, notably high interest rates, increasing energy costs, and unstable exchange rates. He emphasized the critical need to shift reliance from the services sector to more productive areas such as agriculture and manufacturing, which are essential for fostering a self-sufficient economy capable of generating mass employment and sustainable growth. The situation is further aggravated by ongoing insecurity in agricultural regions, which not only limits agricultural output but also negatively impacts associated agro-allied industries. This restricted growth in essential sectors raises the costs for local raw materials, consequently inflating the cost of living, stifling consumer purchasing power, and leaving manufacturers grappling with increasing unsold inventory.
The grim outlook reported by manufacturers has manifested as reduced production activities and heightened unemployment, contributing to a climate of uncertainty that deters foreign investors. The scarcity of foreign currency further complicates manufacturing operations, with manufacturers struggling to secure necessary imports and raw materials. The NBS report indicates a deceleration in manufacturing growth across various sub-sectors, such as food and beverages, suggesting that despite some contributions to output, the overall trend remains concerning, affecting the sector’s stability and future prospects.
In light of these ongoing challenges, MAN has urgently called for government intervention to revitalize the manufacturing sector. Meshioye proposed several critical measures, including the implementation of single-digit interest rates to support productive sectors and the recapitalization of the Bank of Industry to meet the industrial credit requirements. He advocated for a reevaluation of import duty rates on essential production inputs, alongside initiatives to address infrastructure deficits through public-private partnerships. Additionally, the need to revise excessive electricity tariffs and stabilize domestic gas supply rates was emphasized, pointing out that these adjustments are crucial to lowering operational costs for manufacturers.
To create a favorable environment for manufacturing to thrive, Meshioye further urged the government to mitigate the rising costs of compliance associated with Environmental Impact Assessments and Effluent Discharge fees, retain the current excise duties that safeguard industries from further shutdowns, and clear outstanding dollar obligations. Echoing the sentiments of many stakeholders in the economy, Meshioye concluded with a strong message advocating for decisive governmental action to tackle challenges plaguing the manufacturing sector. Without timely interventions, he warned that the ambitious target of a $1 trillion economy would remain an elusive dream for Nigeria, thereby underscoring the urgency for a coherent and strategic response to foster industrial growth.
