The Chemical and Non-Metallic Products Employers Federation (CANMPEF) has expressed deep concern over the mounting pressure of inflation and rising production costs on Nigeria’s industrial sector, warning that the trend could undermine the nation’s fragile economic stability if left unaddressed.
At the Federation’s 46th Annual General Meeting (AGM) held in Lagos, CANMPEF President, Chief Devakumar Edwin, said the country’s manufacturers continue to grapple with foreign exchange volatility, multiple taxation, and high energy costs — challenges that have significantly eroded profit margins and hindered productivity.
Despite these hurdles, Edwin noted that Nigeria’s manufacturing industry demonstrated resilience in 2024, recording modest growth driven by local resource utilisation, product innovation, and expanded regional export opportunities.
However, he emphasized that the sustainability of this progress depends on the government’s ability to tackle inflationary pressures and stabilise input costs.
“The business environment remained constrained by high input costs, multiple taxes, and limited access to foreign exchange,” Edwin stated.
“Yet, our members continue to adapt by optimising resource use, sourcing local materials, and expanding to new regional markets.”
Inflation and Rising Production Costs: The Major Threats to Industrial Growth
The impact of inflation and rising production costs has become a defining challenge for Nigerian manufacturers in 2025.
According to CANMPEF, inflation reached a staggering 34.8 per cent by the end of 2024, driven largely by soaring energy prices and currency depreciation.
The exchange rate, which averaged N1,623.26 per dollar, marked a 2.13 per cent drop from the previous quarter — further compounding production expenses for industries reliant on imported raw materials.
Chief Edwin explained that while the removal of fuel subsidy and the floating of the naira were introduced to stabilise the economy, these reforms inadvertently pushed operational costs to record highs.
Energy expenses — including the cost of diesel and gas — surged by over 60 per cent, making manufacturing increasingly expensive and uncompetitive.
He noted that the manufacturing sub-sector grew modestly by 1.79 per cent year-on-year, according to the Central Bank of Nigeria’s Q4 2024 Economic Report.
Capacity utilisation rose slightly to 61.9 per cent, but the overall industrial environment remained constrained by inflation, import dependence, and regulatory bottlenecks.
“Despite the economic headwinds, manufacturers are staying afloat through innovation and adaptability.
Many firms have switched to local substitutes, invested in renewable energy sources, and diversified product lines to reduce dependence on imports,” Edwin added.
CANMPEF’s Industrial Agenda for 2025
Looking ahead, CANMPEF unveiled a new industrial development agenda for 2025 aimed at deepening local value chains, boosting infrastructure, and strengthening government engagement with the private sector.
According to Edwin, the Federation’s strategic plan focuses on four key pillars:
- Infrastructure Development: Advocating improved power, transportation, and logistics systems to reduce production costs.
- Local Value Addition: Encouraging industries to use more domestic raw materials and reduce foreign dependency.
- Regulatory Reforms: Pushing for simplified tax frameworks and transparent policies to attract investment.
- Skill Development and Technology Adoption: Promoting innovation and workforce training to enhance productivity.
He stressed that for Nigeria’s industrial sector to thrive, there must be a deliberate policy shift toward supporting local manufacturers through consistent and transparent policies.
Inflation’s Ripple Effect on Employment and Investment
CANMPEF’s report also highlighted how inflation and rising production costs have affected job security and investment confidence in the sector.
With rising expenses, many companies have been forced to scale down operations or delay expansion plans, while small and medium enterprises struggle to access affordable financing.
The Federation warned that without targeted interventions, the manufacturing industry could face stagnation, leading to reduced employment opportunities and declining investor interest.
“Manufacturers need a predictable business environment. Inflationary volatility and unstable exchange rates make it difficult to plan and invest long-term,” Edwin stated.
“Government must prioritise industrial growth as a cornerstone of economic recovery.”
Government’s Policy Reforms and Industry Expectations
In response to the macroeconomic challenges, the Federal Government has recently introduced fiscal and monetary reforms aimed at stabilising prices and encouraging local production.
However, CANMPEF cautioned that while these initiatives are commendable, they must be complemented by consistent implementation and private sector consultation.
The Federation urged the government to:
- Address infrastructure bottlenecks that inflate logistics costs;
- Provide targeted tax incentives to genuine local manufacturers;
- Improve access to foreign exchange for industrial importers; and
- Strengthen collaboration between the Central Bank of Nigeria and the private sector to curb inflationary trends.
“Policy consistency is the lifeline of industrial development,” Edwin remarked.
“When investors can predict the business climate, they are more willing to commit capital and create jobs.”
Restoring Industrial Stability Amid Inflation
Ultimately, CANMPEF reaffirmed its commitment to supporting Nigeria’s economic transformation through advocacy, collaboration, and innovation.
The Federation pledged to continue working with the government to achieve a stable, inclusive, and sustainable manufacturing sector.
Edwin concluded that Nigeria’s industrial growth potential remains strong, provided inflation is managed and production costs are contained.
“Our Federation will remain a partner in progress — championing policies that empower manufacturers, create jobs, and drive economic stability,” he said.
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