NSDC urges reforms to cut manufacturers’ production costs

Nigerian manufacturers are struggling with significantly higher production costs compared to international competitors, threatening the nation's market share across Africa. Kamar Bakrin, Executive Secretary of the National Sugar Development Council (NSDC), highlighted this critical issue during the 17th National Council on Industry, Trade and Investment meeting.

Bakrin pointed to electricity, financing, and logistics as major cost burdens. Nigerian manufacturers pay substantially more for power, with industrial electricity costing up to 15 cents per kilowatt-hour on the national grid, and nearly 30 cents when using diesel generators. This forces factories to operate as private power stations, incurring an estimated N1.34 trillion in electricity generation costs last year alone.

“

In my words, every factory in Nigeria is running a second, unwanted business as a private power station.

Financing costs in Nigeria range from 27 to 35 percent for working capital, starkly contrasting with rates around nine percent in Vietnam and three percent in China. Furthermore, Nigeria's logistics performance ranks poorly, at 88th out of 139 countries, compared to Vietnam's 43rd position.

Despite a large population and access to the African Continental Free Trade Area, manufacturing's contribution to Nigeria's GDP remains low at about eight percent, with capacity utilization at 57.7 percent. Bakrin stressed that the problem is not a lack of demand but a solvable cost-of-production issue. He noted that recent macroeconomic reforms have created a more stable environment, but urgent action on production costs is needed to attract and retain manufacturing investments amidst global supply chain restructuring.

“

None of this is a demand problem. Nobody on this continent needs persuading to buy what Nigeria makes. It is a cost-of-production problem, and that distinction matters, because costs, unlike demand, are within our power to fix.