Wednesday, October 1, 2025 - As the nation celebrates
her 65th anniversary on October 1, this year, stakeholders have warned that
such celebrations should be done cautiously, since the state of the
nation’s economy still calls for sober reflection.
The stakeholders, comprising the Manufacturers Association
of Nigeria (MAN); Association of Small Business Owners of Nigeria (AS BON) and
Lagos Chamber of Commerce and Industry (LCCI); have therefore charged the
government on the need to intensify efforts at easing the reforms-induced pains
individuals and businesses have continued to endure in the past two years.
They argued that, while there seems to be some form of
positives in the fact that the non-oil sector of the economy, unlike in
the past, now contributes significantly to the nation’s Gross
Domestic Product (GDP), they are however of the opinion that the real sector,
such as Manufacturing, which should have been the major driver of the nation’s
economic growth has not been able to perform such role, due to a myriad of
challenges, ranging from inflation, to high interest rates, huge
electricity rates, and diminishing consumer purchasing power, among
others, facing the sector.
For instance, in his review of the performance of the sector
in 2024, the President, Manufacturers Association of Nigeria (MAN), Mr. Francis
Meshioye, believed the sector was not able to contribute maximally to the
nation’s GDP, due to different macro-economic and infrastructural
challenges facing it, during the period under review.
For instance, manufacturing’s share of the economy dropped
significantly from 16.04 per cent in Q4 2023 to 12.68 per cent in Q2 2024,
indicating a contraction in economic activity within the sector.
“In 2024, Nigeria’s manufacturing encountered a myriad
of macroeconomic and infrastructural challenges that severely impacted its
performance. The sector faced mounting pressure from high inflation, a
depreciating Naira, rising interest rates, escalating electricity
tariffs, record low sales, multiplicity of taxes and levies and
militating security concerns, which affected profitability and hindered
the sector’s contribution to the nation’s GDP,” he stated.
On inflation, the MAN boss described as alarming, the 34.6
per cent inflation figure recorded in November 2024, a development, he argued, diminished
consumers’ purchasing power and caused a decline in demand for manufactured
goods.
According to him, another of the consequences of all these, was the
huge unsold inventory of N1.4 trillion, recorded across companies in the
sector, during the period.
Meshioye also identified the steep decline in the value of
the Naira, from N666/$ in mid 2023 to over N1700/$ by mid-2024, due to the
floating of the exchange rate, as another major factor for the sector’s
non-performance in 2024.
He noted that the interest rate figure at 27.7 percent,
recorded by November 2024, also made it difficult for operators in the
sector to access financing for expansion, since it raised borrowing cost
for expansion and modernisation; thereby limiting, severely, the potential
for investment in the sector, impeding long-term growth prospects.
Interestingly, one challenge that seems intractable in the
sector remains the issue of high electricity tariff. A drastic rise in
electricity tariffs by over 250 per cent, manufacturers complained, have made
energy costs become one of the highest operating expenses for businesses in the
sector in 2024.
In a bid to remain in business, they argued, manufacturers
now seek alternative energy sources, a development that has further
strained their financial resources and complicate their ability to remain
competitive.
Speaking in this same vein, the President of the
Association of Small Business Owners of Nigeria, Dr. Femi Egbesola, noted that
the impact of the reforms on small businesses, in the past two years, had been
very negative, since over 2 million businesses had shut down over the period due
to the reforms.
He added that small businesses had also continued to
groan under the heavy burden of multiplicity of taxes. Egbesola, however
expressed the optimism that the new tax reforms, expected to kick off in
January next year, would serve as a form of relief to small
businesses.
“A lot of things will change for good. And if ano,
micro and small businesses which form about 96 percent of businesses that we
have in Nigeria, are positively impacted by these tax reforms, it would
also impact the economy, positively,” he stated.
He said part of the survival strategies adopted by operators
in the sector, has been the decision to leverage the opportunities
presented by the African Continental Free Trade Agreement (AfCFTA) to enhance
their fortunes.
“We are beginning to look at how we can be innovative
in he way we run our business. That is why you see some of us
involved in exports, especially non-oil export. We are also leveraging AfCFTA,
ECOWAS and echnology to be able to survive at this time,” he stated.
While expressing the optimism that, with time, businesses
would begin to reap the fruits of the reform, he however charged government on
the need to begin to think of how to give soft landing to small businesses
by cushioning the effects of those reforms.on their operations.
In its review, the Lagos Chamber of Commerce and
Industry LCCI expressed the delight hat key indicators are showing some
positive trends, with GDP growth accelerating to 4.23 percent in Q2, of this year;
and headline inflation gradually easing, to 2012 percent as of August.
The Chamber, however called for sober reflection on the
state of the nation’s economy, and the business environment, since sustained
reforms still remained imperative to unlocking the country’s full
potential.
“At 65, Nigeria stands at a pivotal juncture. We need
to deepen structural reforms that ease the cost of doing business. With the
benchmark rate still as high as 27%, weak power supply, high energy costs, and
an expensive exchange rate for critical imports, businesses are operating in a
harsh business environment.
“We must prioritise infrastructure investments,
particularly in power, logistics, and broadband. We need critical
infrastructure upgrades to support innovation, digital transformation, and
industrialization,” it added.
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