Despite the Federal Government’s optimism over economic “gains” recorded in 2025—most notably easing inflation and improved foreign exchange stability—Nigeria’s manufacturers say the relief barely reached factory floors. For much of the year, many operated in survival mode, squeezed by rising costs, tight policies and weak consumer demand. While macroeconomic indicators suggested gradual improvement, industry players insist the recovery felt slow, uneven and largely disconnected from everyday business realities.
A major turning point for manufacturers was the sustained reform of the foreign exchange market, which unified rates and improved access to dollars. Although this boosted transparency and investor confidence, the sharp depreciation of the naira dramatically increased the cost of imported raw materials and machinery. Firms dependent on imports saw margins shrink as production costs soared, forcing many to absorb losses or pass higher prices on to consumers already struggling with inflation.
Monetary tightening by the Central Bank of Nigeria further weighed on the sector. Interest rates climbed to as high as 35–37 per cent, making bank loans largely unviable, especially for small and medium-scale manufacturers. At the same time, higher electricity tariffs, continued reliance on self-generated power, rising fuel prices following subsidy removal, and poor transport infrastructure combined to push operating costs even higher. These pressures reduced capacity utilisation, slowed expansion plans and, in some cases, triggered job losses.
Trade and fiscal policies also delivered mixed outcomes. While the African Continental Free Trade Area (AfCFTA) opened access to a wider market, Nigerian manufacturers struggled to compete due to high local production costs and infrastructure gaps. Multiple taxation across federal, state and local levels, alongside higher excise duties and regulatory compliance costs, further strained businesses. Although government-backed backward integration showed promise in sectors like agro-processing and cement, inconsistent implementation limited its broader impact.
Industry experts say 2025 was better on paper than it felt in reality. David Etim of Calabar and Gulf of Guinea Municipal and Trade Centre noted that lingering effects of inflation since 2023 wiped out working capital for many firms, leaving only well-structured companies able to survive—often through equity financing rather than bank loans. Manufacturers Association of Nigeria Expert Group member Imokhai Ehimigbai and analyst Dapo Omojola echoed this view, describing the year as one of resilience rather than relief. While GDP growth and exchange rate stability offered cautious optimism, they stressed that sustained policy consistency, tax relief, improved security and infrastructure are critical if manufacturers are to move from survival to real growth in 2026 and beyond.
source: The Sun