High Production Costs Rendering Nigerian Manufacturers Uncompetitive, Says NSDC Boss

High operational expenses, particularly in energy, credit, and logistics, are severely undercutting the competitiveness of Nigerian manufacturers compared to global peers, according to Kamar Bakrin, Executive Secretary of the National Sugar Development Council. Speaking at the 17th National Council on Industry, Trade and Investment in Enugu, Bakrin emphasized that the primary challenge facing domestic factories is the high cost of production rather than a lack of consumer demand.

He highlighted stark cost disparities, noting that industrial electricity costs around eight cents per kilowatt-hour in Vietnam and ten cents in China, while Nigerian manufacturers pay roughly 15 cents on the national grid and up to 30 cents when running diesel generators. As a result, Nigerian businesses spent an estimated 1.34 trillion naira on self-generated power in the past year alone.

Furthermore, working capital interest rates in Nigeria range between 27 and 35 percent, compared to single-digit rates in competing nations, while port clearance times remain inefficient at 18 to 21 days. Consequently, manufacturing contributes just eight percent to Nigeria’s gross domestic product, with capacity utilization dropping to 57.7 percent.

To address these systemic bottlenecks, the council chief proposed target reforms, including delivering dedicated power to industrial clusters at eight to ten cents per kilowatt-hour, lowering industrial lending rates to single digits, and reducing port clearance times to under seven days.

He also advocated for establishing state-level industrial competitiveness indices, enforcing local procurement policies, and implementing performance-tied incentives. Bakrin warned that without structural interventions in energy and infrastructure, local industries will struggle to compete under the African Continental Free Trade Area.