Manufacturers Spend N1.34tn on Alternative Power
Nigerian manufacturers spent N1.34 trillion on alternative energy sources in 2025 to keep their factories running. This expenditure represents a 71.4 percent surge from the N781.68 billion recorded in 2023. The Manufacturers Association of Nigeria disclosed these figures in a comprehensive evaluation of recent state reforms. The data shows that the industrial sector is paying a heavy price for national economic restructuring. Factory owners are absorbing massive operational shocks to compensate for a dysfunctional public electricity infrastructure.
The removal of the fuel subsidy and the liberalisation of the foreign exchange market severely disrupted factory operations. Logistics and distribution costs spiked by over 300 percent within weeks of the subsidy removal. Industrialists faced further distress when the electricity regulator raised tariffs for premium Band A consumers. Prices soared from N68 per kilowatt-hour to over N200 per kilowatt-hour. Despite this steep increase, the national grid collapsed repeatedly and failed to deliver steady electricity.
To maintain production lines, manufacturers turned heavily to private gas, diesel, and petrol generators. This self-generation strategy eroded industrial profit margins and weakened the competitiveness of locally made goods. Manufacturing capacity utilisation fell from 61.3 percent to 57.7 percent in the latter half of 2025. The worsening business environment also forced companies to downsize their operations. Over 18,900 industrial workers lost their jobs during this two-year adjustment period.
Aggressive monetary policy interventions by the central bank further complicated capital access for the sector. Repeated hikes in the benchmark interest rate pushed commercial borrowing costs to punitive levels. Prime lending rates reached 24.4 percent, while maximum lending rates peaked at 33.8 percent. Credit to the manufacturing sector fell sharply from N10.88 trillion to N6.6 trillion by December 2025. These restrictive financial conditions have made long-term industrial expansion projects commercially unviable.
The industrial association welcomed a few recent government interventions designed to cushion the economic pain. Industrialists expressed optimism about the domestic Naira-for-Crude initiative and targeted tax concessions under new legislation. They also backed the strategic focus of the National Single Window platform and local content frameworks. However, factory owners insist that these isolated programs cannot replace a stable macroeconomic environment. The state must deliberately pivot from aggressive taxation to production-focused incentives.
Sustainable economic growth will remain elusive without a resilient and competitive domestic manufacturing base. Factory owners need affordable foreign exchange, concessionary investment loans, and a reliable national power supply. The government must align its fiscal consolidation targets with the survival needs of real-sector businesses. Immediate policy adjustments are required to lower production costs and stimulate industrial recovery. Analysts warn that ignoring the industrial squeeze could derail the broader economic transition program.