•May further compound the sector’s N2.1trn Unsold Inventory issue —Operator
•CPPE puts annual spent on petrol, generators at N10 trn, N3.7trn
•Crisis bad for business- LCCI, says 57million litres fuel consumption more than domestic refining capacity
THE escalating crisis in the Middle East and its attendant impact on the cost of energy in Nigeria may stall plans by the nation’s ailing manufacturing to achieve a 3.1 percent growth by the end of the 2026, checks among stakeholders in the sector have revealed.
The stakeholders believe that the crisis in the Middle East involving United States of America, Israel and Iran may have disrupted whatever plans operators in the sector must have developed at achieving growth, at the beginning of the year.
For instance, earlier in the year, the President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye, had hinted on the intention of the association to achieve a 3.1 percent growth for the sector in 2026, as against the slightly over 1 percent recorded in 2025.
Meshioye, who expressed optimism on the positive outlook for the nation’s economy in 2026, added that with strong advocacy, focused squarely on the fundamentals that mattered, the association would be able to improve the fortunes of the sector, and enhance its growth.
But, an operator in the sector, who would not want his name in print, told the Nigerian Tribune that the projections were obviously made when the Middle East crisis had not started.
“I doubt if this will be achievable now, if this crisis continues for a longer time,” argued the operator, whose company operates in the food and beverages category of the manufacturing sector.
According to him, between February, when the war began, and now, the operational costs of his company has increased by over 50 percent, due to higher energy costs.
“We combine solar, generators and power from the national grid to run our operations. Earlier in the year, the price of diesel for our generators could still be purchased for slightly below N1,000, but today, we are experiencing over 50 percent increase in price.
There is no way this will not translate into higher cost, and at the end of the day, make a higher positive growth we had envisaged a pipe dream,” he stated.
Kazeem Adedeji, whose company produces nylon bags in Lagos, believes the recent surge in the price of fuel portends grave danger for the sector.
“There is a limit to which you can hike prices, especially at a time when the purchasing power of the average Nigerian is being eroded by a mix of factors, including inflation and high cost of energy. What we may have at the end of the day is an increase in the sector’s unsold inventory if we continue to produce, since today’s consumers seem to have had their purchasing powers completely eroded.
Remember, the issue of unsold inventory has been a major source of worry for manufacturers over the years. The present development may compound the problem, and this is definitely not the way to enhance growth,” he added.
MAN, last year, had put the sector’s unsold inventory at N2.1 trillion as at April 2024, a development it attributed to weakened consumer demand, surge in production costs and erosion of the purchasing power of the Nigerian consumers.
Speaking on the high energy costs and the need to protect individuals and businesses, the Centre for The Promotion of Private Enterprise (CPPE) attributed the nation’s heavy reliance on petrol and diesel for power generation, to unreliable electricity supply.
This, the centre noted, has created a strong and immediate pass-through from global oil prices to domestic inflation.
It put the economic losses annually incurred due to unreliable electricity supply at between N7 to N10 trillion, claiming over N3.7 trillion is spent on generators, alone, annually.
“This structural dependence means that energy price shocks quickly translate into higher production costs, transport costs and general price levels across the economy,” it added.
The implications for businesses, especially SMEs, it argued, is that energy, logistics and raw material costs are elevated, while weak consumer demand limits pricing flexibility, thereby resulting in the squeeze on margins, declining profitability and rising business vulnerability, particularly in consumer-facing sectors.
The centre, therefore, stressed the urgent need to improve electricity supply, adding that reliable power remains the most effective long-term solution to Nigeria’s energy cost crisis.
“Strengthening generation, transmission and distribution infrastructure, alongside support for decentralized energy solutions, would significantly reduce production costs and inflationary pressures,” it added.
The Lagos Chamber of Commerce and Industry (LCCI) also agreed the surge in the price of fuel is bad for business, including manufacturing.
It attributed the high cost in fuel and its affordability challenge to structural supply deficit, since the nation’s daily petrol demand, of over 50-53 million litres, has continued to outpace effective domestic refining capacity.
This, the chamber argued has continued to amplify price pressures; since supply becomes increasingly concentrated.
It therefore called on government to give immediate priorities, such as targeted, time-bound support for manufacturing and other critical sectors, including transportation, agriculture, and SMEs to mitigate inflationary spillovers, while avoiding inefficient blanket subsidies.
The chamber also called for urgent action to boost crude production specifically to feed the local refineries, which, in turn, will help adequately supply the local economy.