The moderation in Nigeria’s headline has yet to translate to improved production costs for manufacturers, the Manufacturers Association of Nigeria (MAN) has said.

Director-General of MAN, Segun Ajayi-Kadir, said high energy, logistics, financing and raw material costs continued to weigh heavily on manufacturers despite the decline in headline inflation from 15.43 per cent in July.

Reacting to the August inflation figures, Ajayi-Kadir acknowledged the decline as a positive development, particularly as price stability is critical to business planning, investment and consumer welfare.

He, however, cautioned that the marginal reduction showed that the improvement remained fragile.

More importantly, he said a lower headline inflation rate did not necessarily mean that manufacturers were experiencing lower production costs.

According to him, manufacturers continue to operate in an environment characterised by high energy and logistics costs, expensive FX, elevated raw material prices and multiple fiscal and regulatory charges.

He said the latest inflation data should prompt the government to move beyond managing headline inflation and tackle the structural costs that continue to make production expensive.

Ajayi-Kadir noted that weak consumer purchasing power was limiting manufacturers’ ability to pass rising production costs to consumers, thereby squeezing profit margins and increasing working capital requirements.

He added that high energy, financing and logistics costs were also keeping investors cautious and constraining capacity utilisation.

According to him, some manufacturers may be forced to reduce production where additional shifts or higher input purchases become commercially unsustainable.

He warned that high domestic production costs could also make locally manufactured goods less competitive, while sustained cost pressures could constrain manufacturers’ ability to expand and create jobs.

Ajayi-Kadir said sustainable economic growth required more than a gradual decline in headline inflation.

He called for an operating environment that would provide manufacturers with access to affordable energy, finance, FX, and logistics, while encouraging greater local sourcing of inputs.

He urged the government to use the period of moderating inflation to implement targeted cost-reduction and productivity-enhancing measures to enable manufacturers to produce more at lower cost, attract investment, create jobs, and improve competitiveness.

On energy, he called for a dedicated and reliable electricity supply to major industrial clusters, priority access to gas for industrial users, incentives for investment in efficient captive power and renewable energy systems, and a review of electricity tariff structures affecting productive industries.

Ajayi-Kadir noted that transport contributed 1.64 percentage points to inflation and urged the government to identify major corridors linking ports, industrial clusters, agricultural production zones and markets for priority rehabilitation and maintenance.

He also called for the implementation of relevant provisions of the new tax laws to promote equity, fairness and transparency.

The MAN chief urged the government to eliminate multiple taxation and overlapping levies while ensuring that tax reforms did not impose additional burdens on manufacturers.

He also called for the effective implementation of the Nigeria First Policy to promote the procurement and consumption of locally manufactured goods.

In addition, he advocated a targeted, long-term manufacturing financing window at below-market rates for working capital, machinery and productivity-enhancing investments, particularly for MSME manufacturers.

He said addressing these structural constraints would be critical to ensuring that the moderation in headline inflation eventually translates into tangible improvements in the operating environment for manufacturers.