Nigeria’s Manufacturers Face Rising Energy, Finance and Inventory Costs

Nigeria’s manufacturing sector grew by 3.24% year-on-year in Q2 2026, below overall GDP growth of 4.43%. Industrial growth also slowed to 3.96%, while the electricity, gas, steam and air-conditioning segment contracted by 10.63%. Commercial gas prices rose modestly from $2.63 to $2.68 per MMBtu in April. However, the bigger challenge for factories is the combined cost of gas, grid power, backup generation, maintenance, logistics and equipment needed to keep production stable. The Central Bank’s September reduction of the Monetary Policy Rate from 26.5% to 23% lowers the policy benchmark, but manufacturers may still face high lending rates depending on bank pricing, collateral and risk. Expansion decisions must account for equipment costs, foreign-exchange exposure, energy use, working capital and expected returns. For manufacturers, the key indicators are energy cost per unit, machine-hour utilisation, raw-material days, production downtime, financing cost and inventory turnover. Tracking these measures can show whether factories are protecting margins and generating enough cash flow for their next investment cycle.

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