Nigerian manufacturers are struggling to translate modest sales gains into higher production, investment, and employment, as high borrowing costs, foreign exchange constraints, poor infrastructure, and regulatory bottlenecks continue to weigh heavily on operating cost and productivity.

With two out of every three manufacturers identifying cutthroat commercial bank lending rates as a major disincentive to productivity, they said these, as well as poor infrastructure, have severely limited their capacity to expand production.

This is according to the Manufacturers Association of Nigeria’s (MAN) Manufacturers’ CEOs Confidence Index (MCCI) for Q2 2026, which examined the impact of macroeconomic indicators and the operating environment on manufacturing productivity.
The survey found that the cost of borrowing remains one of the biggest impediments to manufacturers, with two in every three chief executives saying commercial bank lending rates discourage productivity.

Manufacturers also described the volume of bank credit available to the sector as insufficient, suggesting that businesses are being constrained not only by the cost of loans but also by limited access to financing.

MAN’s Director-General, Segun Ajayi-Kadir, said the high-interest-rate environment directly affects production costs because interest rates determine the cost of credit available to manufacturers.

He noted that they have consistently borne the impact of the Central Bank of Nigeria’s interest-rate tightening aimed at containing inflationary pressures.

Although the monetary policy rate (MPR) was reduced to and maintained at 26.5 per cent, he decried that the rate remains one of the highest in Africa, contributing to limited financing flows from commercial banks to manufacturers.

He noted that the situation requires urgent correction, given the strategic role of manufacturing in economic growth and employment generation.

With FX availability also emerging as a major constraint on productivity, over half of the manufacturers surveyed expressed dissatisfaction with improvements in FX sourcing, despite FX reforms.

The DG added that manufacturers are still forced to make their own arrangements for accessing FX, particularly when importing raw materials, machinery and other equipment required to sustain production.

According to him, such self-provision of critical inputs is too expensive and a major hindrance to capacity utilisation.
Decrying the limited impact on infrastructure spending, most manufacturers said government expenditure on infrastructure is severely discouraging manufacturing activity.

Acknowledging government’s efforts to bridge the country’s infrastructure deficit, Ajayi-Kadirsaid the spill-over effects of any expenditure, if it exists, is yet to reach the real sector.
Consequently, he said, manufacturers continue to incur substantial costs providing their own transport and logistics, further increasing the cost of doing business.

Beyond macroeconomic conditions, the operating environment also emerged as a significant drag on productivity. He decried the outrageous number of regulations affecting businesses, while the implementation of the Nigeria Tax Act 2025 remained a source of uncertainty.

Although the law was designed, among other things, to reduce overregulation, he said members continue to report visits from different tax authorities demanding all manner of taxes and levies. He said this is unacceptable and brings into question the tax reforms they were promised earlier in the year.

Delays at the ports also continued to affect manufacturing operations, particularly the timely importation of materials required by production plants.

At the same time, poor patronage of Nigerian-made products by Ministries, Departments and Agencies (MDAs) was identified as another weakness in the operating environment. He said Executive Order 003, which seeks to promote patronage of locally manufactured products, remains largely unenforced.

Also decrying rising insecurity in many parts of the country, he said all these pressures are affecting manufacturers’ operating costs and productive capacity.

Although manufacturers recorded a modest increase in sales volume between April and June 2026, production and distribution costs continued to rise, while shipping costs also increased. The survey also showed that capacity utilisation, investment levels and labour employment remained unchanged during the quarter.

He warned that improving productivity will depend significantly on reducing finance costs, improving FX and infrastructure, as well as creating a more predictable operating environment capable of lowering costs associated with production, transportation and imports.