By Yinka Kolawole
Manufacturers in Nigeria spent an estimated N1.34 trillion on alternative energy sources in 2025, representing a 71.4 per cent increase from N781.68 billion recorded in 2023, as businesses grappled with the rising cost of production triggered by ongoing economic reforms.
The Manufacturers Association of Nigeria (MAN) disclosed this in its assessment of the Federal Government’s economic reforms over the past three years, describing the period as one of difficult but consequential economic transition.
Director-General of MAN, Mr. Segun Ajayi-Kadir, said while the reforms were necessary to address long-standing structural distortions and reposition the economy for sustainable growth, manufacturers had borne a disproportionate share of the adjustment burden.
According to him, the combined impact of fuel subsidy removal, exchange rate liberalisation, electricity tariff adjustments and tight monetary policy significantly altered the operating environment for industries.
“The immediate removal of fuel subsidy in May 2023 caused logistics and distribution costs to rise by over 300 per cent within weeks,” Ajayi-Kadir stated.
He noted that the pressure on manufacturers worsened following the increase in electricity tariffs for Band A consumers from about N68 per kilowatt-hour to between N209 and N225 per kilowatt-hour.
Despite the steep tariff hike, electricity supply remained unstable due to recurring grid collapses and system disruptions, forcing manufacturers to rely heavily on alternative energy sources such as diesel, gas and premium motor spirit.
MAN revealed that expenditure on alternative energy rose from N781.68 billion in 2023 to N1.11 trillion in 2024 before climbing further to N1.34 trillion in 2025.
The association said the rising energy costs weakened industrial competitiveness and contributed to a decline in manufacturing capacity utilisation, which fell from 61.3 per cent in the first half of 2025 to 57.7 per cent in the second half of the year.
It added that the worsening operating environment also led to significant job losses, with more than 18,900 jobs affected during the review period.
MAN also expressed concern over the tight monetary policy environment, noting that repeated increases in the Monetary Policy Rate and the reduction of intervention financing programmes pushed borrowing costs to unsustainable levels.
“As of March 2026, prime lending rates averaged 24.4 per cent, while maximum lending rates reached 33.8 per cent in several commercial banks, making long-term industrial investment increasingly difficult,” Ajayi-Kadir said.
Nevertheless, MAN welcomed several recent policy measures, including the Naira-for-Crude initiative, tax incentives for manufacturers under the 2025 Tax Reform Act, the Nigeria Industrial Policy, and the Nigeria First local content framework.
The association said these initiatives could stimulate industrial growth if effectively implemented, but stressed that macroeconomic stabilisation must now give way to deliberate policies that support production, lower operating costs and improve industrial competitiveness.
“Nigeria cannot achieve sustainable economic prosperity without a strong manufacturing base,” MAN stated, urging the government to prioritise affordable foreign exchange access, concessionary financing, reliable electricity supply and predictable trade policies to unlock the sector’s growth potential.
