The Chemical and Non-Metallic Products Employers Federation has raised concerns over rising energy costs, expensive borrowing, weak consumer demand and mounting job losses in Nigeria’s manufacturing sector, despite improvements in some major economic indicators in 2025.
The federation disclosed that manufacturers spent an estimated N1.35tn on alternative electricity sources during 2025, while 18,935 manufacturing jobs were lost in the first half of the year.
Its President and Vice President of the Dangote Group, Chief Devakumar Edwin, raised the concerns at the federation’s 46th Annual General Meeting in Lagos.
Edwin called on the Federal Government to reduce energy and financing costs, harmonise taxes and levies, and introduce stronger measures to support local production.
He noted that Nigeria’s economy grew by 3.87 per cent in 2025, compared with 3.38 per cent in 2024, while inflation declined and the foreign exchange market became more stable.
However, he said manufacturing growth remained weak, rising to only 1.41 per cent in 2025 from 1.20 per cent in the previous year. The sector’s contribution to real Gross Domestic Product also fell to 8.05 per cent from 8.24 per cent.
According to Edwin, improvements in macroeconomic indicators must translate into higher industrial output, sustainable employment and increased exports if the reforms are to benefit manufacturers.
He maintained that although the economic reforms introduced from mid-2023 had produced measurable gains, many businesses continued to face high operating costs that constrained production and investment.
Electricity shortages increase production costs
Edwin identified unreliable electricity supply as one of the major challenges facing manufacturers, particularly producers of chemicals, plastics, rubber, glass, ceramics and other non-metallic mineral products.
He said that despite installed grid capacity exceeding 13,000 megawatts, average delivered electricity generation remained below 5,000MW, compared with estimated demand of about 18,345MW.
He attributed the shortfall to gas supply constraints, transmission bottlenecks and recurring grid collapses, which have forced manufacturers to rely heavily on generators and other alternative energy sources.
Citing figures from the Manufacturers Association of Nigeria, Edwin said manufacturers spent approximately N1.35tn on alternative power in 2025, representing a 23 per cent increase over the previous year.
He noted that the situation was particularly difficult for businesses operating energy-intensive kilns and furnaces, including producers of glass, ceramics, lime and other non-metallic minerals.
The federation called on the government to prioritise gas supplies to industries, settle outstanding debts in the power sector and establish a more predictable electricity tariff framework.
It also advocated greater investment in captive and embedded power generation, including renewable energy solutions for industrial clusters.
Manufacturers seek cheaper loans
The federation also expressed concern over high borrowing costs, saying expensive credit made it difficult for manufacturers to invest in equipment, expand factories and undertake long-term projects.
Edwin called for sustained monetary easing and improved access to affordable financing with longer repayment periods, particularly for small and medium-sized manufacturers.
He further warned that weak consumer purchasing power continued to limit demand for locally manufactured goods.
Although headline inflation declined from 24.48 per cent in January to 15.15 per cent in December 2025, based on the National Bureau of Statistics’ rebased series, the federation said many households were still struggling to recover from the effects of the 2023 currency devaluation.
Figures from MAN cited by Edwin showed that manufacturers lost 18,935 jobs in the first half of 2025, compared with 10,891 during the corresponding period of 2024.
Capacity utilisation improved to 61.3 per cent in the first half of 2025 from 57.6 per cent in the second half of 2024. However, the federation said the continued loss of jobs highlighted the fragile nature of the sector’s recovery.
Federation calls for tax harmonisation
CANMPEF identified multiple taxes, levies and regulatory charges as additional burdens on manufacturers, warning that overlapping responsibilities and fees imposed without sufficient consultation were increasing production costs.
While welcoming the Federal Government’s tax reforms, which took effect on January 1, 2026, the federation urged the authorities to ensure that implementation did not introduce additional levies or worsen the financial pressure on businesses.
It called for a coordinated tax and regulatory framework, clearer responsibilities among regulatory agencies and mandatory consultations with industry stakeholders before new charges or regulations are introduced.
The federation also urged stronger enforcement against counterfeit and substandard products, which it said were undermining legitimate manufacturers, particularly in the chemicals, paints, soaps and allied products subsectors.
Producers in these industries continue to face high foreign exchange costs for imported raw materials and petrochemical feedstock, alongside rising energy expenses, inflation and weak consumer demand.
Plastics and rubber manufacturers also face expensive electricity and logistics, as well as competition from imported goods.
In the pharmaceutical subsector, CANMPEF acknowledged the Federal Government’s import-duty and value-added tax relief on 875 pharmaceutical raw materials. The relief began in March 2025 and is scheduled to continue until March 2027.
The federation called for similar targeted support for essential industrial inputs that cannot yet be sourced competitively within Nigeria.
Better infrastructure needed
CANMPEF also called for improved security along industrial corridors, better roads, more efficient ports and effective implementation of the Nigeria National Single Window to reduce cargo clearance delays and transportation costs.
It said protecting lives and property and improving transport infrastructure were essential to reducing the cost and risks associated with moving raw materials and finished goods across the country.
The federation warned that the outlook for 2026 would depend largely on whether improvements in economic stability translated into lower and more predictable operating costs.
It added that fuel and freight expenses could continue to put pressure on manufacturers, delaying the recovery of profit margins. Adjustments to the new tax framework, product-tracking requirements and proposed environmental levies could also require additional time and resources from businesses.
Source: Vanguard
