The Manufacturers Association of Nigeria has stated that economic reforms introduced under President Bola Tinubu’s administration have sharply raised production costs for manufacturers, with spending on alternative energy rising to N1.34tn in 2025 and further weakening industrial performance.

While acknowledging that the reforms have established a base for long-term economic restructuring, the association called on the Federal Government to prioritise policies that support industrial recovery and stimulate growth.

In a document assessing the impact of recent economic reforms on industrial performance, MAN said manufacturers have carried a disproportionate share of the adjustment burden from the implementation of key policies, including fuel subsidy removal, exchange rate liberalisation, electricity tariff increases and tight monetary policy.

The Director-General of MAN, Segun Ajayi-Kadir, said the reforms have significantly reshaped the operating environment for manufacturers, triggering unprecedented rises in production costs.

According to the association, the removal of the fuel subsidy in May 2023 led to a more than 300 per cent surge in logistics and distribution costs within weeks. It added that the increase in electricity tariffs for Band A consumers further worsened production challenges across the manufacturing sector.

“Although these measures were designed to stabilise the macroeconomy and restore investor confidence, they simultaneously triggered unprecedented increases in production costs across the industrial sector,” Ajayi-Kadir stated.

MAN noted that despite electricity tariffs rising sharply from about N68 per kilowatt-hour to between N209 and N225 per kilowatt-hour, power supply has remained unstable, citing ongoing grid failures and frequent system disruptions.

The association said manufacturers have therefore become heavily dependent on diesel, gas, and premium motor spirit to sustain operations.

“As a result, manufacturers continued to rely heavily on alternative energy sources such as diesel, gas and premium motor spirit to sustain operations. Expenditure on alternative energy surged from N781.68bn in 2023 to N1.11tn in 2024 and further increased to N1.34tn in 2025,” Ajayi-Kadir stated.

MAN further noted that the growing energy burden has weakened industrial competitiveness and contributed to a decline in manufacturing capacity utilisation.

“This development severely weakened industrial competitiveness and contributed to declining manufacturing capacity utilisation, which dropped from 61.3 per cent in the first half of 2025 to 57.7 per cent in the second half of the same year,” Ajayi-Kadir stated.

The association further disclosed that the deteriorating operating environment led to significant job losses, with more than 18,900 jobs affected during the review period.

On foreign exchange reforms, MAN said the liberalisation of the forex market had mixed effects. While exchange rate unification improved transparency, the rapid depreciation of the naira significantly increased the cost of imported industrial inputs.

The association noted that the exchange rate moved from about N463/$ in June 2023 to N899/$ by December 2023, and later to around N1,535/$ by December 2024.

As a result, the cost of imported raw materials rose from N3.04tn in 2023 to N6.64tn in 2024, representing an increase of about 118 per cent.

MAN also disclosed that manufacturing value added declined sharply from $45.2bn in 2023 to $21.84bn in 2024, with inadequate access to foreign exchange at the official market remaining a major constraint for manufacturers.

The association further attributed weak industrial expansion to high interest rates, noting that prime lending rates averaged 24.4 per cent as of March 2026, while maximum lending rates reached 33.8 per cent in some commercial banks.

“Under such conditions, long-term industrial investment became increasingly difficult and commercially unattractive,” Ajayi-Kadir stated.

According to MAN, credit to the manufacturing sector fell from N10.88tn in February 2024 to N6.6tn by December 2025.

Despite the prevailing challenges, the association commended several recent government initiatives, including the Naira-for-Crude programme, tax incentives for pharmaceutical manufacturers, the 2025 Tax Reform Act, the Nigeria Industrial Policy, the Nigeria First framework, and the National Single Window platform.