Association urges FG to tackle energy, transport, taxation and financing costs to sustain disinflation
The Manufacturers Association of Nigeria (MAN) has welcomed the further moderation in Nigeria’s headline inflation rate to 15.39 per cent in August 2026, from 15.43 per cent in July, describing the 0.04 percentage-point decline as a positive development for economic planning and consumer welfare.
However, MAN cautioned that the marginal decline remains fragile and should not obscure the persistent structural costs confronting manufacturers across the country.
In its position on the August 2026 inflation figures, the Association stressed that a decline in the headline inflation rate does not necessarily translate into lower production costs for manufacturers.
According to MAN, manufacturers continue to contend with high energy costs, logistics challenges, exchange-rate pressures, elevated raw-material prices, as well as multiple fiscal and regulatory charges.
The Association said the latest inflation figures should therefore provide an opportunity for the Federal Government to move beyond managing inflation towards addressing the structural cost pressures that make domestic manufacturing expensive.
MAN noted that manufacturers are often unable to fully pass rising production costs to consumers because of weak purchasing power. This, it said, continues to put pressure on profit margins while increasing working capital requirements.
“When input prices rise, manufacturers require more funds to purchase the same quantity of materials,” the Association noted, adding that high energy, financing and logistics costs are also making investment decisions increasingly cautious.
The Association warned that persistent cost pressures could constrain capacity utilisation, as some manufacturers may reduce production when the cost of operating additional shifts or procuring additional inputs becomes commercially unsustainable.
It further noted that high domestic production costs could weaken the competitiveness of Nigerian-made products against imported alternatives, while sustained pressures on manufacturers’ operating costs could also affect their ability to expand production and create additional employment.
MAN: Inflation Moderation Must Translate to Lower Production Costs
While acknowledging the August inflation figures as a modest positive signal for the Nigerian economy, MAN stressed that sustainable economic growth requires more than a gradual decline in headline inflation.
The Association called for an operating environment where manufacturers can access affordable energy, finance, foreign exchange and efficient logistics, while increasing the local sourcing of production inputs.
MAN urged the Federal Government to use the current period of relative inflation moderation to implement targeted cost-reduction and productivity-enhancing measures capable of enabling manufacturers to produce more at lower cost, attract investment, create jobs and strengthen Nigeria’s competitiveness.
Five-Point Policy Recommendations
To support sustainable economic growth and strengthen the manufacturing sector, MAN called for the implementation of targeted measures, including:
1. Reduce the cost of industrial energy
Government should adopt measures to lower the cost of energy used for industrial production. These should include dedicated and reliable electricity supply to major industrial clusters, priority access to gas for industrial users, incentives for manufacturers investing in efficient captive power and renewable-energy systems, and a review of electricity tariff structures affecting productive industries.
MAN said the effectiveness of energy reforms should ultimately be measured by the reduction in the cost of energy required to produce a unit of manufactured output, rather than simply by increases in electricity generation.
2. Prioritise key transport corridors
With transport contributing 1.64 percentage points to inflation, MAN urged government to identify and prioritise the rehabilitation and maintenance of major transport corridors linking ports, industrial clusters, agricultural production zones and key markets.
The Association also called for stronger collaboration between the Federal and state governments to eliminate unnecessary road charges and overlapping transport-related levies that add to the cost of moving goods across the country.
3. Ensure tax reforms support local production
MAN called for effective implementation of the relevant provisions of the new tax laws to promote equity, fairness and transparency.
It also urged government to eliminate multiple taxation and overlapping levies, while ensuring that tax reforms do not inadvertently impose additional fiscal burdens on local production.
4. Strengthen the Nigeria First Policy
The Association called for effective implementation of the Nigeria First Policy to promote the procurement and consumption of locally manufactured goods, particularly within government procurement.
According to MAN, stronger preference for locally produced goods would help stimulate domestic production, support industrial capacity and strengthen the manufacturing value chain.
5. Establish targeted long-term manufacturing finance
MAN also recommended the introduction of a targeted, long-term manufacturing financing window at below-market rates to support working capital, machinery acquisition and productivity-enhancing investments.
The Association said particular attention should be given to micro, small and medium-sized manufacturing enterprises (MSMEs), which often face significant financing constraints.
MAN maintained that the moderation in August inflation provides an opportunity to consolidate price stability while addressing the underlying cost pressures affecting productive businesses.
The Association therefore urged the Federal Government to align monetary, fiscal, energy, infrastructure and industrial policies towards creating a more predictable and cost-efficient operating environment for manufacturers.
It said reducing the cost of production would not only support manufacturers but also improve consumer welfare, strengthen local competitiveness, encourage investment, expand employment opportunities and contribute to sustainable economic growth.
