Nigerian manufacturers spent an estimated N1.35 trillion on alternative power in 2025, about a 23 per cent jump from N1.1 trillion in 2024 as rising cost of keeping factories running continues to erode resources needed for expansion and technology investment.

The Manufacturers Association of Nigeria (MAN) said the 23 per cent increase in alternative energy spending came amid factory closures and production cuts, warning that the cost of self-generation was becoming unsustainable and could push the manufacturing sector towards collapse.

Speaking at the opening of MAN’s 54th Annual General Meeting and Made-in-Nigeria Exhibition in Lagos, the association’s President, Francis Meshioye, said the huge expenditure on alternative power illustrated the broader cost pressures confronting manufacturers.

He said manufacturers were being squeezed by energy costs, foreign exchange exposure, financing costs, logistics, regulatory charges and weak consumer purchasing power, all of which were affecting production costs and investment decisions.

Meshioye raised concerns over Nigeria’s continued dependence on imported raw materials, saying the country imported approximately N3.53 trillion worth of raw materials in the first half of 2025, with about N1.72 trillion sourced from Asia.

According to him, the figures showed the extent to which domestic manufacturing remained dependent on imported inputs, warning that increasing the production of finished goods without developing domestic sources of raw materials and intermediate inputs would constrain local value addition.

Meshioye said the challenge had become more urgent as Nigeria seeks to position itself as Africa’s industrial hub under the recently approved national industrial policy.

He listed reliable and affordable energy, access to finance, availability of industrial inputs, efficient logistics, regulatory predictability, productivity and the ability of firms to invest and scale as key indicators of the success of the policy.

Meshioye cited Central Bank data showing that manufacturing capacity utilisation increased from 51.33 per cent in the first quarter of 2025 to 57.50 per cent in the second quarter.

However, he cautioned against interpreting the improvement in capacity utilisation in isolation from the rising costs confronting manufacturers.

He called on the Federal Government to accelerate implementation of the industrial policy, arguing that policy adoption alone would not translate into industrial growth without effective execution.

Meshioye also urged the government to enforce Executive Orders 003 and 005, which he said demonstrated its commitment to promoting domestic production through the patronage of locally manufactured goods.

He called for sanctions against ministries, departments and agencies that failed to comply with the orders.

He further urged government agencies and political parties to prioritise Nigerian-made products during the forthcoming electoral period, noting that significant quantities of promotional and other materials would be required during elections.

According to him, increased patronage of locally manufactured goods would provide a boost to domestic manufacturers beyond the electoral cycle.

The MAN president said positioning Nigeria as an industrial hub required more than increased production volumes, stressing the need for competitive production, deeper local value addition, stronger domestic supply chains, technology investment and access to markets within Africa and beyond.

He said this was particularly important to Nigeria’s participation in the African Continental Free Trade Area (AfCFTA), noting that Nigerian manufacturers could only benefit commercially from regional markets if they could compete on cost, quality, standards, reliability and delivery.

Also speaking, the Director-General of the National Institute for Policy and Strategic Studies (NIPSS), Professor Ayo Omotayo, said Nigeria could not achieve its economic ambitions without a stronger manufacturing sector.

Omotayo said manufacturing had the potential to contribute as much as 25 per cent of Nigeria’s Gross Domestic Product, compared with what he described as its current contribution of about 3.3 per cent.

He said Nigeria’s manufacturing difficulties had previously been linked to an outdated industrial policy, prompting NIPSS and industry stakeholders to work towards developing a new policy.

He challenged MAN to work with government on a dedicated policy for raw materials, arguing that Nigeria could not continue to spend trillions of naira importing inputs required by its industries.

Omotayo also identified the cost and availability of electricity as major constraints to manufacturing, saying the sector needed cheaper and more reliable energy to reduce production costs.

He disclosed that NIPSS was proposing to the President that the power and energy sector be examined to find faster solutions for making electricity available to manufacturers more effectively and affordably.

He also urged manufacturers to explore alternative approaches to providing cheaper power for their operations rather than relying entirely on the wider power sector.

Omotayo linked manufacturing performance to the country’s foreign exchange position, arguing that Nigeria’s dependence on imported finished goods and raw materials continued to drive demand for dollars.

He said manufacturing accounted for a significant portion of the country’s foreign exchange demand, adding that stronger domestic production could help reduce pressure on the naira.

While acknowledging improvements in the foreign exchange environment, he called for stronger collaboration between universities and manufacturers, particularly in developing locally produced components for industries that currently depend heavily on imported machinery and spare parts.

MAN’s Director-General, Segun Ajayi-Kadir, said the exhibition demonstrated the range and diversity of products that could be manufactured locally.

He, however, acknowledged that energy availability and affordability, production-input costs, logistics and the regulatory environment remained major impediments to industrial competitiveness and investment.

Ajayi-Kadir said the success of the national industrial policy would ultimately depend on consistent implementation that produced measurable improvements in industrial investment, productive capacity, manufacturing productivity, value addition, employment and competitiveness.