Nigeria’s manufacturers have said the recent moderation in inflation has not yet translated into lower production costs, as businesses continue to face high energy, logistics, financing, foreign exchange and raw-material expenses.
The Manufacturers Association of Nigeria (MAN) made the assessment following the release of Nigeria’s August inflation figures. MAN Director-General, Segun Ajayi-Kadir, acknowledged the decline in headline inflation but said the improvement remained fragile and had not significantly changed the cost pressures confronting manufacturers.
According to MAN, manufacturers are still operating in an environment where electricity and energy costs remain high, financing is expensive and raw materials continue to be affected by elevated costs. The association also pointed to logistics expenses and multiple taxes and regulatory charges as additional pressures on businesses.
Ajayi-Kadir said weaker consumer purchasing power was making it difficult for manufacturers to fully transfer rising production costs to customers. This, he said, is putting pressure on profit margins and increasing the amount of working capital businesses need to maintain operations.
The association also warned that continued high production costs could affect manufacturers’ ability to increase output, expand their businesses and create new jobs.
MAN called for measures aimed at reducing structural costs, including improved electricity supply to industrial areas, better access to gas, affordable financing and more efficient transportation infrastructure.
The group also urged the government to reduce multiple taxation and overlapping levies while supporting the use of locally manufactured goods.
The concerns come as Nigeria’s headline inflation continues to moderate. However, MAN stressed that a lower inflation rate alone does not necessarily mean that businesses are experiencing lower operating costs.
