Manufacturers Seeks Shift On Policy To Boost Industrial Energy Security, Grid Optimisation

The Manufacturers Association of Nigeria (MAN) has proposed adoption of a stronger approach that will facilitate Industrial Energy Security and Grid Optimisation as part of a broader package of measures to restore industrial competitiveness.

To achieve this the Nigerian Electricity Regulatory Commission (NERC) should take measures to approve Eligible Customer status for contiguous industrial clusters, enabling them to enter into direct bulk Power Purchase Agreements (PPAs) with Generation Companies (GenCos).

According to MAN, the measure would help industrial clusters bypass inefficiencies in electricity distribution and eliminate arbitrary charges.

The Association also proposed a matching-grant facility through the Bank of Industry to reduce the upfront cost for manufacturers investing in captive solar photovoltaic systems and battery storage.

The MAN also called for urgent measures to reverse the country’s declining industrial fortunes, reduce import dependence and unlock sustainable expansion in the real sector.

This was part of recommendations after it analysed the National Bureau of Statistics (NBS) Q2 2026 Gross Domestic Product (GDP) report, which showed that Nigeria’s real GDP grew by 4.43 per cent year-on-year in the second quarter, compared with 3.89 per cent in Q1 2026 and 4.23 per cent in Q2 2025.

According to the Manufacturers, although the headline GDP figure indicates some resilience in the economy, a closer examination reveals a widening gap between overall economic growth and the performance of the real sector. MAN noted that services accounted for 56.62 per cent of GDP, while the broader industrial sector contributed 17.23 per cent, adding that the industrial sector was facing severe structural challenges.

It raised concerns over the decline in industrial growth, which fell from 7.46 per cent in Q2 2025 to 3.96 per cent in Q2 2026.

The Association attributed the decline largely to the electricity, gas, steam and air-conditioning supply segment, which contracted by 10.63 per cent during the quarter.

It also expressed concern over the decline in manufacturing’s contribution to real GDP, which dropped from 9.57 per cent in Q1 2026 to 7.72 per cent in Q2, while real manufacturing growth marginally declined from 3.29 per cent to 3.24 per cent.

MAN warned that continued reliance on service-driven growth and extractive activities would not adequately strengthen foreign exchange reserves, reduce structural inflation or create the sustainable industrial jobs needed to absorb Nigeria’s growing workforce.

On monetary and foreign exchange interventions, MAN called for a dedicated credit guarantee scheme through the Ministry of Finance Incorporated (MOFI) and the Development Bank of Nigeria (DBN) to de-risk commercial lending and reduce interest rates for manufacturers.

It also recommended the establishment of a prioritised and transparent foreign exchange clearance window within the official market for raw materials and capital machinery imports backed by Letters of Credit.

On industrial policy and public procurement, MAN called for the enactment of the Nigeria Industrial Policy 2025 as an Act of Parliament to make industrial targets and incentives legally binding and prevent arbitrary policy reversals by successive administrations.

It further proposed integrating the Bureau of Public Procurement portal with a local content registry to ensure that Ministries, Departments and Agencies meet a 60 per cent local procurement target.

The association also advocated for a Local Patronage Compliance Act requiring government agencies to give Nigerian manufacturers the right of first refusal in procurement, with foreign purchases subject to a temporary Certificate of Non-Availability issued through MAN and the Federal Ministry of Industry, Trade and Investment.

For targeted subsector recovery and backward integration, MAN urged the government to enforce the 10-year tax relief for local vehicle assembly under the Nigeria Automotive Industry Development Plan (NAIDP), while imposing appropriate import surcharges on fully built imported vehicles.

It also called for zero-rated VAT and early-stage tax exemptions for traceable domestic farm-to-factory supply chains to reduce the cost of locally sourced raw materials.

The Association further recommended an annual threshold for imported goods in areas where domestic production capacity exists, allowing a three-year window for local assembly and an additional two years for transition to full-scale manufacturing.

MAN said the decline in manufacturing’s GDP contribution within a single quarter reflected the mounting pressure faced by domestic manufacturers from high production costs, exchange-rate volatility, elevated interest rates and rising electricity tariffs.

Although manufacturing recorded 3.24 per cent year-on-year growth, the association noted that its declining share of GDP showed that manufacturing expansion was lagging behind the broader economy.

A breakdown of manufacturing subsectors, according to MAN, also revealed significant structural differences.

Oil refining grew by 43.94 per cent, while cement expanded by 12.75 per cent. MAN said the strong performance of oil refining demonstrated the potential impact of increased domestic refining capacity and value addition.

However, labour-intensive sectors recorded weaker performances. Textile, apparel and footwear, which account for 22.95 per cent of manufacturing real GDP, contracted by 1.23 per cent, while motor vehicles and assembly declined by 1.02 per cent.

Food, beverage and tobacco, the largest manufacturing group with a 36.58 per cent share, grew by only 2.79 per cent, which MAN attributed partly to weak consumer purchasing power and persistent food inflation.

The association warned that the continued weakness of labour-intensive manufacturing could worsen employment fragility, while slow growth in basic consumer-goods production could intensify supply constraints and prolong food inflation.

It further cautioned that the absence of a strong export-oriented manufacturing base would leave Nigeria dependent on volatile primary commodity exports for foreign exchange, thereby maintaining pressure on the naira.

MAN also warned of further erosion of industrial capacity and technological obsolescence, noting that high energy costs and expensive credit were forcing many manufacturers, particularly small and medium-sized enterprises, to operate significantly below installed capacity.

The association said manufacturers were increasingly focused on keeping their factories operational rather than expanding production lines, investing in modern technology or improving global competitiveness.

MAN concluded that the Q2 2026 GDP performance underscored the need to anchor Nigeria’s long-term prosperity in productive domestic manufacturing rather than service consumption and extraction.

It reaffirmed its commitment to working with the government and other stakeholders to drive what it described as a much-needed industrial renaissance