Segun Ajayi-Kadri
I would like to start by conveying my deep appreciation to BusinessDay Media Limited for inviting me as Keynote Speaker at this esteemed 2025 BusinessDay Manufacturing Conference. This year’s conference themed “Unlocking Nigeria’s Manufacturing Potential: Strategies for Sustainable Growth Amid Economic Turbulence” is apt and timely. This is because we operate in an era of economic uncertainty, global supply-chain disruption and rapid technological change. Therefore, unlocking the evident potentials of the Nigerian manufacturing sector is not just an economic imperative, it is a strategic necessity for sustainable national development.
Permit me to state an African proverb which says: “Smooth seas do not make skillful sailors.” Within the context of my presentation, I interpret the proverb to mean that it is during times of socioeconomic and geopolitical turbulence, such as we are in now, that good leaders are proved. Those that posses bold vision, decisive action and innovation that build resilience. All of us must play the part. This is the central point of my address today at this conference.
To this end, I would like to start by situating my presentation within a global perspective.
II. Manufacturing in the Global Economy
The global industrial landscape has changed, as governments around the world are reordering policy priorities, with heightened uncertainties around investment, production and trade flows reaching new highs. The global economy in 2025 is navigating a turbulent terrain, marked by a slowdown from 3.5% growth in 2022 to 3.3% in 2024. In January this year, the IMF projected a modest growth of 3.3% by 2025, but recently announced a downgrade to 2.8%, the lowest in the last 5 years, bulged by the Trump 2.0 spillover effect. The global economic landscape is undergoing seismic shifts, characterized by geopolitical uncertainty, inflationary pressures, disrupted supply chains, protectionist policies, energy market volatility, and fragile financial markets.
The manufacturing sector is not insulated from this phenomenal. As a matter of fact, it is only national economies that prioritized industrialization and built a virile manufacturing sector that are better placed to withstand the global shocks. China, the United States, Germany, India, South Korea and Malaysia have all witnessed remarkable industrial developments, mostly due to their vibrant manufacturing sectors. These six industrial powerhouses collectively command 60% of global manufacturing output. In the last two decades, China’s manufacturing value-added has skyrocketed from $625.22 billion to $4.66 trillion.
In Africa, Egypt, Nigeria and South Africa are the leading industrial giants, with manufacturing value-added of $59 billion, $55.9 billion and $49.3 billion respectively; collectively contributing 49.2% of the continent’s manufacturing output. In Nigeria, the manufacturing sector is a vital engine of economic growth, contributing significantly to value added, GDP, employment, government revenue, foreign exchange inflow and technological advancement. In 2024, the sector recorded a market value of ₦37.49 trillion, representing 13.9% of the country’s market size and accounting for 8.64% of real GDP. The sector employs an estimate of 12.7 million people, contributing 12.5% to total employment, generating significant tax revenue, with manufacturers paying over ₦578.39 billion and ₦626.42 billion in local Non-Import VAT and CIT respectively in 2023. The sector’s linkages with agriculture, construction and services are evident.
Despite the hostile macroeconomic environment and the persistent depreciation of the Naira, the sector still generated over $6.72 billion through manufactured exports in 2019, above $1.51 billion export earnings in 2024 and attracted $1.59 billion of foreign investment in 2023 (NBS, 2024). Intentional efforts at scaling these critical contributions to Forex inflow are vital for the stability of the local currency, upscaling employment generation and enhancement of economic growth.
In addition, the sector earned $2.2 billion from the export of medium and high-tech manufactured products in 2022 due to the slow but steady processes of adopting new technologies that support improved productivity. Undoubtedly, these contributions underscore the sector’s critical role in driving currency stability, employment generation and economic growth.
Unfortunately, despite its importance, the full potential of the manufacturing sector remains untapped, operating below its capacity due to macroeconomic headwinds; deficient infrastructure facilities and inadequacy of supportive government policies and incentives.
III. Status of the Nigeria Manufacturing Sector
Distinguished Participants, Ladies and Gentlemen, it is generally accepted that the manufacturing sector is the engine of Nigeria’s industrialization, yet its current performance is sub-optimal. Its performance had remained lacklustre due to numerous familiar binding constraints like unstable exchange rate, inadequate power supply/ high cost of energy, high inflation, insecurity, multiplicity of regulatory agencies and high regulation costs, high interest rate & poor access to credit, deficient infrastructure, high logistics cost, unfavourable trade policies and low patronage
Available data shows that manufacturing capacity utilization plummeted from 73.3% in 1981 to 57% in 2024 and contribution to the economy has shrunk from 29.9% to 8.6% over the same period. Real growth has decelerated from 14.7% in 2014 to 1.38% in 2024, while non-oil export contributions have nose-dived from 82.37% in 2019 to 25.13% in 2024.
As at 2023, 767 manufacturing companies have shut down operations and over 18,000 jobs were lost in 2024 alone due to the hostile business environment. This is evident in the country’s ranking of 97th in the Global Competitive Industrial Performance Index; an uninspiring 44 places below South Africa.
The sector is worse hit by the prevailing economic downturn. It is now facing the combined storm of Forex losses, rising raw material costs, high energy prices, multiple taxation, escalated borrowing costs, infrastructural deficits and policy uncertainties.
Credible data revealed that in last year alone, the exchange rate depreciated by 53% and the cost of imported raw materials surged by 118% to ₦6.64 trillion. In the same year, documented forex losses of manufacturers within MAN increased from ₦983 billion in 2023 to ₦1.62 trillion due to Naira depreciation as well as the non-settlement of the $2.4 billion worth of Forex forward contract by the CBN.
The SMI cadre is particularly impacted by the cost of alternative energy which skyrocketed from ₦781.7 billion in 2023 to ₦1.1 trillion in 2024, consequent upon the 240% increase in electricity tariff. In addition, Finance costs jumped by over 44 percent to ₦2.06 trillion in the 2024 from ₦1.43 trillion in 2023, while multiplicity of taxes and excessive regulation have further stifled manufacturing growth.
Market access and integration remain limited due to inadequate trading information and infrastructure deficits. The poor transport system has escalated logistics costs, making Nigerian manufacturers less competitive. Insecurity has elevated business risks, increased costs and made the investment environment uncertain. Agro-allied industrial activities have remained challenged by insurgent activities and farmer-herder clashes.
From the foregoing, it is evident that the business-operating environment is constraining Nigeria’s industrialization. Urgent action is therefore required to address these challenges and unlock the growth potential of the manufacturing sector. The current administration’s commendable efforts at improving production capacity and reforming the operating environment need to be accelerated and effectively coordinated.
Time will not permit me expatiate on the challenges listed below and I really do not think that it is necessary. I will therefore race to the part that talks about the imperatives for a virile manufacturing sector that will guarantee sustainable development·
Infrastructure and logistics challenges: Inadequate transportation networks and poor logistics services, particularly around major ports and industrial corridors, create bottlenecks in the supply chain, making the operating environment inconducive for manufacturers. For instance, a recent report has shown that with a land mass of 923,768 square kilometres and a population of over 230 million, Nigeria has a road network of only 200,000km, and only 37% of the roads are in good condition, impacting logistics and market access. This situation makes it difficult for manufacturers to produce competitively and export efficiently.
Insecurity: The state of insecurity in Nigeria remains deeply worrisome, inspite of government’s evident efforts at bringing it under control. The persistent activities of terrorists groups continued to force manufacturers out of business. Quite a number of our members have shut down operations, especially in the Northeast. The operations of these groups, along with rising inter-communal violence, put manufacturing operations and investments at serious risk.
High burden of multiple charges and checkpoints around major transportation and trade corridors: For example, while it has been noted that about 53 checkpoints exist between Mile 2 and Seme border, the 20km Seme to Badagry route has a total of 34 checkpoints. This makes movement of goods and trading difficult.
Increased competition from cheap, adulterated, substandard and smuggled products: Dumped and smuggled goods captured significant market share in sectors like textiles and electronics in 2024, undercutting local prices and causing revenue loss for manufacturers. The flood of substandard, second-hand products threatens local manufacturers.
Inconsistent government policy: Policy instability continues to undermine the sector.
Poor access to long-term funds and high borrowing costs: Financing remains a hurdle, with long-term funds scarce and average borrowing costs from commercial banks in 2024 increased to 35.5%, up from 28.06% in 2023, compared to 8% in South Africa.
Inadequate energy supply and high energy cost: Electricity costs and accessibility remained a major concern. Inadequate energy supply significantly impacts industrial operations, with an increased percentage of industry energy consumption now produced off-grid. In 2024, industrial electricity users on Band A witnessed an increased tariff by over 240%. Manufacturers’ spending on alternative energy sources such as diesel, other fuels, and generators rose sharply in the year. Total expenditure hit N1.11 trillion in 2024, a 42.3% increase from N781.68 billion in 2023. This challenge raises manufacturers’ operational costs and reduces competitiveness.
High importation cost of essential inputs: Due to the high and volatile foreign exchange rate and high import duties, the cost of importing needed raw materials has risen astronomically. Sadly, while most of these raw materials are not available locally, those that are available are scarce and becoming limited in supply.
High interest rate, high inflation, and high exchange rate: The present inflation rate, interest rate, and exchange rate are all detrimental to business operations, driving up manufacturing production costs. High borrowing costs, the escalating cost of inputs, and a depreciating exchange rate are particularly burdensome for manufacturers.
Infrastructural inadequacy: Poor infrastructure, including inadequate power supply, poor road networks, and inefficient port facilities, is a serious impediment to the growth of the manufacturing sector.
The cumulative impact of these challenges on the manufacturing sector is substantial, as evidenced by a 35.3% decline in investment in the sector in 2024, according to the MAN survey. Also, there was a significant rise in unsold goods. The inventory of unsold finished goods increased by 87.5% to N2.14 trillion in 2024. This was due to low consumer purchasing power, high inflation and rising production costs. It is not surprising that the manufacturing sector growth has been on a decline for years, falling to 1.40% in 2023 and further dropping to 1.38% in 2024. The sector’s quarter-on-quarter growth reflects a similarly negative trend.
IV. Manufacturing Sector Development as a Strategy for Sustainable Growth
To unlock manufacturing potential and foster sustainable economic growth, individual stakeholders have a role.
I will start with the media, as this is your event. You have a crucial role to play in redefining the manufacturing trajectory for improved economic performance in the country.
- The Role of the Media
The media must leverage its influence to promote the manufacturing sector, work with MAN to champion the reforms necessary for the sector’s survival and sustainable growth. In particular, the media should:
- Amplify MAN’s advocacy: The media should serve as a powerful tool to project MAN’s policy priorities and ensure manufacturers’ concerns are put in the forefront of public and government discourse.
- Hold the government accountable in the implementation of its economic policies: The media must consistently track, analyse, and report on the implementation of industrial, trade, and investment policies to ensure the government delivers on its responsibilities to the manufacturing sector.
- Expose structural constraints: Media can bring sustained attention to challenges such as erratic power supply, forex instability, port inefficiencies, high operational costs, and regulatory bottlenecks that impede growth. You have been doing this, but I am convinced that you can do more.
- Actively participate in the annual conference on the National Council of Industry, Trade and Investment: The media’s engagement at this strategic platform is critical for shaping the national industrial agenda, amplifying stakeholder perspectives, and reinforcing accountability.
- Share our success stories to attract domestic and foreign investment in the manufacturing sector: By telling our success stories and showcasing opportunities, you will help to build investor confidence, highlight the sector’s resilience and potential, and attract capital into the sector.
- Support local content development: Advocate for policies that prioritise local sourcing of inputs. This will help to reduce dependency on imports and strengthen Nigeria’s manufacturing base.
- Facilitate stakeholder dialogue: Media platforms like industry roundtables and conferences hosted by some media outlets enable inclusive dialogue and collaboration between government, private sector, and development partners.
- Promote evidence-based policy engagement: Journalistic coverage backed by data strengthens MAN’s position in calling for reforms that support productivity, competitiveness, and investment in the manufacturing sector.
- What Government Should Do
- The Nigerian government holds the primary responsibility for creating an enabling environment to unlock the manufacturing sector’s potential, a task that requires strategic interventions across infrastructure, fiscal policy, and regional integration issues. In this regard, we should commend the Federal Government for the passage of the four tax reform bills aimed at restructuring, streamlining and establishing unified tax processes. The government should equally be commended for pronouncement of the Nigeria First Initiative. The nation anxiously awaits the expedited consummation of these initiatives and effective implementation.
Other must-do for government include the following:
- Effective engagement and inclusion in policy processes: Government should create structured platforms for regular consultation with manufacturers to ensure policies are inclusive, practical, and aligned with industry needs.
- Gazette the “Nigeria First Policy”. Make the Nigeria First Policy a binding law, and punitive measures should be put in place for violators. This is critical to give the policy legal standing, ensuring transparency, public awareness, and enforceability across government institutions and the private sector.
- Institute mechanisms for gathering and disseminating export market intelligence: Establish systems to gather and share timely, relevant export data through embassies, trade attachés, and agencies, to support manufacturers in accessing and competing in global markets.
- Provide a stable and predictable policy environment: Consistent and transparent policies are essential for investor confidence, long-term planning, and industrial growth.
- Urgently improve infrastructure and logistics networks: Invest heavily in critical transport infrastructure, particularly roads, ports, and industrial corridors, to reduce logistics bottlenecks. We appreciate the recent development in the sector. But with only about 37% of roads in good condition, manufacturers still face delayed access to markets and increased transportation costs, making local products uncompetitive both locally and internationally.
- Fastrack Ajaokuta-Kaduna-Kano (AKK) gas pipeline: The project, which is targeted for completion in 2025, is poised to add 3.6 gigawatts (GW) to the national power supply. This boost could reduce the current reliance on diesel generators among manufacturers and improve capacity utilization.
- Protect local industries against unfair trade practices: Stronger enforcement against smuggling, dumping, and counterfeit goods will safeguard local manufacturers and level the playing field.
- Tackle insecurity to protect industrial zones and investments: The government must prioritize national security, especially around manufacturing hubs affected by terrorism, banditry, and inter-communal violence. The rise of insecurity poses direct threats to factories, workers, and raw material sourcing.
- Support local content and value chain development: Incentivizing backwards integration and enforcing local content policies will boost domestic sourcing and deepen industrial linkages.
- Address financing gaps and reduce borrowing costs: With the significant gap between loan applications and fund allocation, coupled with average interest rates exceeding 30%, manufacturers are deprived of affordable, long-term financing.
- Low Hanging Fruit for Immediate Government Action
To demonstrate commitment to industrial growth and reduce the mounting cost pressures on manufacturers, the government should urgently consider the following low-hanging fruit
- A nation without a clear industrial policy is like a ship without a rudder. We must adopt a comprehensive policy framework that guides our industrial development, fosters growth and propels us towards a brighter economic future. Adopting the report of 2024 Manufacturers Summit on Rethinking the Nigeria Manufacturing Sector and MAN Blueprint 2.0 as working documents will Fasttrack the process.
- CBN to Prioritize Forex sales to manufacturers, honours the unsettled $2.4 billion Forex forward contract and restrain commercial banks from harassing manufacturers on matters relating to outstanding forex forwards. This will restore manufacturers’ confidence in the market and peg the exchange rate for calculating customs duty on raw materials, spare parts and machinery that are not available locally.
- The “Nigeria First” Policy must quickly move from initiation to government policy, lest it suffers the same fate as the Executive Orders 003 and 005. Nigeria must seize this moment to transform its manufacturing sector by prioritizing the patronage of local products. If we fail to nurture our own, we will forever be at the mercy of others.
- Cut the benchmark interest rates and actively deploy moral suasion for commercial banks to prioritize lending to manufacturers at single-digit concessionary interest rates.
- Leverage the country’s partnership with BRICS to further diversify its export markets and products and reduce dependence on the US market, Fastrack the deployment of the National Single Window Platform, strengthens inter-agency collaborations at this crucial period of tariff war in order to safeguard the economy against possible aggravated smuggling and dumping.
- Injects life into the manufacturing sector by implementing the ₦1 trillion stabilization fund and facilitate the increase the capital base of the Bank of Industry to meet the credit demand of industries
- Remove the 4% FOB levy permanently and address the concerns of importers who already paid the levy before the suspension: The 4% Freight on Board (FOB) surcharge on exports is an avoidable burden that confronts governments fiscal incentives and compromises the competitiveness of made in Nigeria products. Eliminating it will directly avert the looming price escalation of goods in the face of dwindling disposable income of the average Nigerian, enhance the viability of Nigerian exports and promote non-oil revenue generation. Manufacturers who already paid the levy should either be refunded or allowed to use the sum to settle future payments.
- Halt the astronomical annual charges imposed by FRCN: The Financial Reporting Council of Nigeria’s imposition of heavy charges on non-listed entities is unwarranted and should be withdrawn. Stakeholders engagement should be conducted with the aim of addressing the concerns of impacted companies and aligning the charge with the principles of the current tax reform agenda of government.
- Reverse the 15% increase in Port charges by Nigerian Port Authority: The recent 15% hike in port charges by NPA is ill-timed and would lead to an escalation of the already high cost of imports. This is coming at a time that other ports are lowering costs to boost patronage and improve efficiency.
- Address the 240% hike in electricity tariffs: The massive increase in electricity tariffs—and threats of further hikes—are unsustainable for manufacturers. Government should work with NERC to ensure service reflective and genuine cost-reflective tariff. The DisCos should be compelled to make the needed investment in infrastructure, meter availability and commitment to evident improvement in power supply.
Keynote address at 2025 BusinessDay Manufacturing Conference.
