The Manufacturers Association of Nigeria (MAN) has warned that the country’s industrial sector’s sluggish growth threatens the federal government’s goal of achieving a $1 trillion economy by 2026.
In a statement issued on Monday, MAN attributed the underperformance of the industrial sector, as reflected in the third-quarter 2024 GDP report, to rising interest and exchange rates, as well as escalating energy costs.
Segun Ajayi-Kadir, MAN’s Director General, pointed out that the industrial sector’s growth rate of 2.18 percent, while an improvement over the 0.46 percent recorded in Q3 2023, remains insufficient to support the government’s ambitious economic targets. Ajayi-Kadir also highlighted that the services sector accounted for over half of the GDP, with agriculture and industry contributing 28.65 percent and 17.77 percent, respectively.
He warned, “The dominance of the services sector in the GDP composition is a significant setback for industrialisation. As the services sector thrives at the expense of manufacturing, it jeopardizes efforts to reduce foreign exchange pressures, drive value addition, create mass employment, and generate export revenue.”
Ajayi-Kadir further noted that the weak growth in the manufacturing sector—one of the lowest among all sectors—was indicative of the damaging effects of current macroeconomic policies, including high inflation and the exit of major multinational companies. He also expressed concern about the economic challenges discouraging foreign investment, the scarcity of foreign exchange, and the high cost of production.
“Manufacturers’ negative outlook on the economy has resulted in reduced production and employment. Foreign investors are hesitant to commit to a fragile economy, and foreign exchange shortages further constrain operations,” he said.
The MAN DG also emphasized that, despite some growth in the GDP, Nigeria’s economy needs double-digit growth to address high unemployment, poverty, and a lack of inclusive development. He criticized the impact of inflation on manufacturing, citing the significant drop in nominal growth from 36.59 percent to 32.97 percent year-on-year.
Additionally, Ajayi-Kadir pointed to the failure of both the agricultural and manufacturing sectors to rank among the top-performing industries, largely due to security issues affecting farming areas, which in turn have negatively impacted agro-allied industries.
MAN called on the federal government to take immediate action to address the challenges hindering the industrial sector, including reducing interest rates, recapitalizing the Bank of Industry, improving access to credit for small businesses, and implementing measures to ease customs procedures. The association also recommended revising the environmental impact assessment fees, retaining the current excise duties on non-alcoholic beverages, and prioritizing infrastructure development to boost industrial growth.
The association’s comprehensive recommendations aim to create a more conducive environment for manufacturers, ensuring the sector can contribute more effectively to the nation’s economic development and long-term growth.
