High Energy, Logistics Costs Still Threatening Competitiveness, Jobs – Manufacturers Warns

The director-general of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, has warned that persistent high energy and logistics costs are threatening the competitiveness, capacity utilisation and job creation potential of the manufacturing sector.

Ajayi-Kadir raised the concern in MAN’s position on the August 2026 inflation report, where headline inflation moderated marginally to 15.39 percent in August from 15.43 percent in July.

While acknowledging the moderation as a positive signal for the economy, he said the structural cost burdens facing manufacturers remain unresolved.

According to him, manufacturers continue to grapple with high energy costs, logistics challenges, exchange rate costs, elevated raw-material prices and multiple fiscal and regulatory charges.

The DG noted that transport alone contributed significantly to inflation pressures, reflecting the high cost of moving goods from ports to industrial clusters and markets.

Ajayi-Kadir said the implications of the current cost environment are far-reaching for the sector.

He explained that manufacturers cannot always transfer the full increase in production costs to consumers because purchasing power remains weak.

As a result, profit margins remain under pressure while working capital requirements stay high, as firms require more funds to purchase the same quantity of raw materials.

He also said investment decisions remain cautious, as high energy, financing and logistics costs reduce the attractiveness of new investments, particularly for Micro, Small and Medium-scale manufacturers.

Capacity utilisation may remain constrained, Ajayi-Kadir warned, as some firms may be forced to reduce production when the cost of operating additional shifts or buying additional inputs becomes commercially unsustainable.

He noted that the competitiveness of locally made goods is also at risk, as high domestic production costs make it difficult for Nigerian products to compete with imported alternatives that enter the market at lower prices.

Ajayi-Kadir said sustainable economic growth requires more than a gradual decline in headline inflation, emphasising the need for affordable energy, finance, foreign exchange and efficient logistics, alongside increased local sourcing of raw materials.

To address these challenges, MAN called on the federal government to adopt targeted measures to reduce energy costs, including dedicated and reliable electricity supply to major industrial clusters, priority access to gas for industrial users, incentives for manufacturers investing in efficient captive power and renewable energy systems, and a review of electricity tariff structures.

The Association also urged government to identify and prioritise rehabilitation of major transport corridors linking ports, industrial clusters, agricultural production zones and major markets, and to work with state governments to eliminate unnecessary road charges and overlapping transport levies.

MAN also recommended the implementation of tax reforms to promote equity and eliminate multiple taxation, effective implementation of the Nigeria First Policy to boost local patronage, and introduction of a targeted long-term manufacturing financing window at below-market rates for working capital and machinery.