Nigeria’s manufacturing sector has benefitted from recent monetary discipline, but industry leaders warn that fiscal reforms are essential to translate short-term stability into sustained growth. George Onafowokan, Managing Director and Chief Executive Officer of Coleman Wires and Cables, said policy inconsistency remains the sector’s greatest obstacle despite improvements in inflation and exchange rate stability over the past year.
Nigerian manufacturing competitiveness and fiscal barriers
Onafowokan praised the Central Bank of Nigeria for its tight monetary stance, which he said has helped rein in inflation and restore calm to the foreign exchange market. He stressed, however, that monetary policy alone cannot make Nigerian manufacturing competitive without aligned fiscal measures that lower input costs and provide predictable incentives.
Energy costs are the most immediate concern for manufacturers. Many firms rely on self-generated power and have switched to gas-based systems, yet the price of domestic gas remains considerably higher than what competitors pay in other markets. Onafowokan argued that this pricing gap erodes any cost advantage and weakens the country’s appeal as a manufacturing destination.
The Manufacturers Association of Nigeria has long pushed for more affordable domestic gas pricing, but authorities have not implemented the necessary changes. The persistent difference between export gas prices and those charged to local manufacturers inflates production costs, particularly for industries such as cable manufacturing that depend heavily on imported inputs. Sectors with stronger local sourcing, including cement, are less exposed to these pressures.
Another issue raised is the prolonged delay in approving the monetary tariff policy, which is intended to provide targeted protection and incentives for local industry. According to Onafowokan, repeated postponements have deprived manufacturers of a crucial policy tool needed to scale operations, attract investment, and boost exports.
High interest rates remain a constraint on finance and expansion. Onafowokan suggested that a gradual easing of rates over the coming year could support investment without destabilising price stability. He also warned against aggressive wage increases that are not matched by productivity gains, noting this dynamic contributed to the decline of Nigeria’s textile sector in past decades.
On taxation, the executive struck a cautiously optimistic tone. He said the new tax framework could benefit compliant businesses through lower corporate tax rates and a broader, fairer tax base. He urged the government to step up public communication to address lingering concerns around withholding taxes and multiple taxation, which continue to worry many manufacturers.
Despite the challenges, Onafowokan highlighted opportunities. Nigerian manufacturers are positioning to expand exports across Africa and expect to gain from increased infrastructure spending, particularly in telecommunications and energy. He said that with coherent fiscal support, effective policy execution, and data-driven reforms, the sector can move from recovery to sustained growth.
For policymakers, the message from industry is clear: maintain monetary discipline, but pair it with fiscal measures that reduce energy costs, finalise the tariff policy, and streamline taxation. Doing so would improve competitiveness, attract investment, and help Nigerian manufacturers capitalise on regional trade opportunities.
Key Takeaways:
- Nigerian manufacturing competitiveness depends on aligned fiscal policy, not just monetary stability.
- High domestic gas prices and delayed tariff policy raise production costs for export-focused industries.
- Tax reforms offer relief for compliant firms, but clearer communication is needed to tackle withholding and multiple taxation.
- With coherent fiscal support and targeted incentives, manufacturers aim to expand exports across Africa and capitalise on infrastructure spending.
