Nigeria’s manufacturing sector is in crisis, with falling output, closed factories and rising imports, endangering jobs and the nation’s economic independence. Without urgent intervention, the decline could deepen poverty and erode national resilience, writes Festus Akanbi

At a time when Nigeria’s leaders speak glowingly of reforms and renewal, the numbers emerging from the manufacturing sector tell a sobering story, one of steady decline, diminishing capacity, and a gathering storm that could threaten the country’s economic independence.

Once the backbone of industrial growth and mass employment, manufacturing in Nigeria is fading fast. Factories that once hummed with activity now operate below capacity or have shut down entirely. The nation that prided itself on “Made in Nigeria” goods is now increasingly dependent on imports. 

Economists warn that if unchecked, this decline could cost millions of jobs, deepen poverty, accelerate brain drain, and erode national resilience.

Mounting Pressure

President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye, captured the mood bluntly: “In 2024, Nigeria’s manufacturing sector encountered a myriad of macroeconomic and infrastructural challenges that severely impacted its performance.” 

 “We faced mounting pressure from high inflation, a depreciating naira, rising interest rates, escalating electricity tariffs, record-low sales, a multiplicity of taxes and levies, and serious security concerns. The sector has been under siege,” he told THISDAY.

Worrisome Data

Data from MAN confirm the distress. The industrial sector’s share of Nigeria’s Gross Domestic Product (GDP) has fallen from about 27.6 per cent in 2010 to 21.1 per cent under the 2019 rebased structure. Between 2019 and 2024, manufacturing recorded an average five-year growth rate of minus 0.76 per cent, meaning the sector has been shrinking in real terms. In the first half of 2024 alone, manufacturing’s contribution to GDP slipped from about 16 per cent at the end of 2023 to just under 13 per cent.

The human toll is no less striking. MAN estimates that the sector lost thousands of jobs in 2024 as plants folded or scaled down production. By the end of the year, unsold goods worth about N1.4 trillion were stacked in warehouses across the country, an outcome of high costs, weak purchasing power, and disrupted supply chains. 

“You can imagine what it means for a business to produce goods that consumers can no longer afford. It becomes a vicious cycle. The more costs rise, the fewer people buy, and the fewer jobs can be sustained,”Meshioye said.

Energy, a long-standing albatross, remains the biggest drain. Following a hike in electricity tariffs of more than 250 per cent, many manufacturers say their energy bills have become unbearable. Those who rely on diesel-powered generators spend up to half their operating costs on fuel. 

“Power alone is a tax on productivity. You cannot talk about competitiveness when your factories run on self-generated power at four or five times what producers elsewhere pay,”lamented MAN’s Director-General, Segun Ajayi-Kadir.

Counting the Losses

The implications of this industrial decline go far beyond balance sheets. They touch every aspect of national life, including employment, innovation, foreign exchange, and even social stability.

 Manufacturing, by its nature, is a powerful engine of job creation. It absorbs skilled and semi-skilled labour, drives demand for local raw materials, and stimulates linkages across agriculture, transport, finance, and services. Its retreat, therefore, means fewer opportunities for Nigeria’s restless youth population, already battling unemployment and underemployment.

Analysts warn that the shrinking industrial base also fuels Nigeria’s most painful export, its people. “Brain drain is not just about doctors and nurses,” noted economist Bismarck Rewane, CEO of Financial Derivatives Company. “It’s also engineers, machinists, designers, and technicians who no longer find meaningful work locally. The collapse of manufacturing translates directly into a collapse of opportunities for technical talent. When people cannot create value at home, they take their skills elsewhere.”

For Nigeria, the timing could not be worse. The country is struggling with sluggish growth, persistent inflation, exchange-rate instability, and an ever-widening trade deficit. Manufacturing should be part of the solution, but its decline has become part of the problem. Every additional container of imported goods exerts pressure on foreign exchange reserves and weakens the naira further. The more Nigeria consumes from abroad, the less it produces at home, and the harder it becomes to break the cycle of dependency.

Ajayi-Kadir agrees. “The rebasing of Nigeria’s GDP may have shown that the economy is statistically larger, but it also exposed the structural weakness within our productive sectors,” he said. “We have become a service-heavy economy that does not produce enough. An economy that consumes more than it manufactures is an economy living on borrowed vitality.”

Analysts fear that this hollowing-out of industry could soon become irreversible. With each factory closure, the ecosystem of skills, suppliers, and local content fragments is disrupted. Machinery becomes obsolete, supply chains collapse, and institutional memory fades. Reviving such sectors later can be far more costly than preventing their decay now.

But there are glimmers of hope. MAN and the United Nations Industrial Development Organisation (UNIDO) have been collaborating on a “Nigeria First” initiative to promote local patronage, domestic value addition, and export competitiveness. The policy encourages both the government and the private sector to prioritise Nigerian-made goods in procurement and consumption. Meshioye describes it as “a call to action to rescue the nation’s productive capacity before it’s too late.”

“This policy,” he told THISDAY, “is not about protectionism. It’s about patriotism and economic common sense. Every naira spent on a locally made product multiplies within the economy, sustaining jobs, stimulating suppliers, and boosting government revenue. When we spend on imported goods, that value leaves our shores instantly.”

UNIDO’s Representative to ECOWAS and Nigeria, Jean Bakole, shares this perspective. Speaking at a recent industry roundtable, he said: “No country ever achieved sustainable development by depending on others for its essential goods. Industrialisation remains the surest route to structural transformation. Nigeria has the population, the raw materials, and the entrepreneurial spirit; what it needs now is policy consistency and infrastructure.”

Inconsistency

Indeed, policy inconsistency has been the bane of Nigerian manufacturing. Over the years, abrupt reversals, conflicting import tariffs, unstable exchange-rate regimes, and overlapping taxation have left investors disoriented. One administration bans a product: the next lifts the ban. Some policies encourage import substitution; others open the borders overnight. The result is a climate of uncertainty that discourages long-term investment.

Meshioye believes this inconsistency must end. “Manufacturing is a long-term endeavour. Investors need to plan for five to 10 years. But when policies change every quarter, or when customs tariffs contradict Central Bank directives, or when taxes multiply without consultation, investors simply lose confidence. That is why you see more capital flight than inflow,” he said.

Infrastructure, too, remains a major obstacle. Decaying roads and port congestion inflate logistics costs, while erratic power supply continues to cripple productivity. “We cannot industrialise on generators,” said Dr Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise. “Every government that truly cares about industrialisation must treat power and transport as national emergencies, not routine projects.”

Yet government alone cannot save the sector. The private sector must also raise its game. Large conglomerates, analysts argue, should commit to sourcing raw materials and packaging locally wherever possible. Quality assurance must be a priority, ensuring that “Made in Nigeria” stands for reliability, not compromise. Consumers also have a role to play by supporting local products and holding producers accountable for their standards.

The stakes are enormous. If current trends persist, Nigeria could witness further factory closures, deeper job losses, and a widening gap between the skills its schools produce and the jobs its economy offers. The social implications could be grave, from rising unemployment and crime to continued youth migration. But if the country seizes the moment, invests strategically, and protects its productive base, it could spark an industrial renaissance that powers inclusive growth.

In fairness, the federal government has shown some awareness of the challenge. The Minister of Industry, Trade and Investment, Dr Doris Uzoka-Anite, recently assured stakeholders that President Bola Tinubu’s administration is working to improve the business climate, tackle infrastructure bottlenecks, and harmonise taxes. 

“We are determined to make Nigeria the preferred destination for manufacturing in Africa,” she said. “That requires not just policy reform but also a cultural shift toward valuing our own.”

Ultimately, saving manufacturing means preserving jobs, skills, and hope. It means ensuring that Nigeria’s young, energetic population has something meaningful to create and somewhere meaningful to work. It means building an economy that earns its pride, not imports it.