Nigeria’s plan to raise manufacturing’s contribution to the Gross Domestic Product (GDP) to between 20 and 25 per cent by 2030 faces major challenges, as industry operators warn that the country’s production environment remains too expensive to support rapid industrial expansion.
Manufacturing currently accounts for only about eight per cent of Nigeria’s GDP, with capacity utilisation at 57.7 per cent, despite the country’s population of more than 230 million and access to the African Continental Free Trade Area (AfCFTA), which offers access to a market of approximately 1.4 billion people, Leadership reported.
Industry representatives who spoke at the BusinessDay 2026 Mobility and Logistics Conference said the gap between Nigeria’s industrial potential and actual output was largely driven by the high cost of operating businesses.
One of the immediate concerns is the difficulty manufacturers face in securing affordable financing. The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, disclosed that bank credit to the sector dropped from N8.53 trillion in December 2024 to N6.61 trillion in December 2025.
He said the reduction in available credit, alongside high interest rates, was making it increasingly difficult for businesses to sustain operations and undertake expansion projects.
According to Ajayi-Kadir, although the Monetary Policy Rate had been reduced to 23 per cent, manufacturers were still confronted with commercial lending rates of between 27 and 30 per cent.
He described the borrowing conditions as unsustainable for local industries competing against foreign manufacturers with access to cheaper financing.
The energy situation presents another major setback. Data from MAN showed that manufacturers’ expenditure on alternative electricity rose by 21 per cent, from N1.11 trillion in 2024 to N1.34 trillion in 2025.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said industrial growth would remain difficult without dependable electricity, noting that businesses compelled to generate their own power could hardly compete on production costs.
He identified electricity as a fundamental requirement for industrialisation and called for urgent measures to improve supply to manufacturing facilities.
Beyond power and finance, the country’s distribution network also came under scrutiny, with stakeholders estimating that logistics inefficiencies cost Nigeria approximately N3.2 trillion annually.
Logistics expenses reportedly account for 30 per cent of the cost of goods in Nigeria, significantly above the global average of 11 per cent. The country also occupies the 88th position among 139 countries on the World Bank’s Logistics Performance Index.
Yusuf explained that poor transportation systems and delays in moving goods between ports, factories and markets increase the financial burden on producers and make locally manufactured products more expensive.
He also warned that frequent changes in government policies could discourage long-term industrial investments, insisting that businesses needed a stable regulatory environment to plan and commit capital.
President of the Association of Small Business Owners of Nigeria (ASBON), Dr. Femi Egbesola, argued that Nigeria must move beyond the advantage of having a large consumer population and establish itself as a competitive centre for manufacturing and exports.
He advocated the development of industrial clusters, stronger domestic supply chains and greater investment in technology, research and technical expertise.
Egbesola also urged the government to tackle smuggling, product dumping and unfair import competition, while helping Nigerian businesses meet international production standards and access export opportunities through AfCFTA.
He said industrial development would require consistent execution of government policies, supported by clear targets and accountability.
The ASBON president further proposed that government procurement should give greater preference to locally manufactured products, arguing that increased patronage would expand demand, encourage investment and help domestic producers achieve economies of scale.
Yusuf also backed the proposal, saying government purchases could be used to stimulate local production and strengthen the country’s industrial base.
The stakeholders maintained that Nigeria’s ambition to become a leading manufacturing destination in Africa would depend on its ability to lower production costs, improve infrastructure and create conditions that make local manufacturing commercially competitive.
