Business
Manufacturers groan as rising credit, production costs threaten recovery
By Yinka Kolawole
Nigeria have warned that the high cost of credit and rising production expenses remain major threats to the recovery of the manufacturing sector, despite a renewed improvement in manufacturers’ confidence in the economy.
This was revealed by the Manufacturers Association of Nigeria (MAN) in its
Manufacturers’ CEOs Confidence Index (MCCI) for the second quarter of 2026 (Q2’26).
Manufacturers’ CEOs identified limited access to finance as their primary challenge, with two in every three executives citing commercial bank lending rates as a major disincentive to manufacturing productivity. They also described the volume of credit available to the sector as inadequate.
The manufacturers linked the high cost of borrowing directly to the Central Bank of Nigeria’s (CBN) monetary policy stance, particularly the Monetary Policy Rate
(MPR), which stood at 26.5 per cent during the quarter.
According to the manufacturers, the prevailing high-interest-rate regime had increased the cost of credit and, by extension, production costs, weakening manufacturers’ ability to expand output, invest and create jobs.
The report noted that although the MPR had been reduced and maintained at 26.5 per cent, the rate remained too high to support the financing needs of the real sector.
The manufacturers further noted that the limited flow of bank credit, combined with rising energy, distribution, shipping and raw material costs, continued to constrain productivity and capacity utilisation.
“Two in every three CEOs cited commercial bank lending rates as a disincentive to manufacturing productivity,” the report stated, stressing that the cost of credit directly influences production costs.
They also complained about frequent power outages, inadequate foreign exchange supply, high production costs, shortages of raw materials, multiple taxation and inadequate government infrastructure.
Despite reforms in the foreign exchange market and relative stability in the naira, about half of the manufacturers surveyed said improvements in foreign exchange sourcing had not translated into sufficient access to foreign exchange for their operations.
They argued that the situation continued to limit manufacturers’ ability to operate at full capacity, while also raising the cost of imported inputs and machinery.
Only 27 per cent of manufacturing executives considered government expenditure on infrastructure encouraging for manufacturing activity, reflecting concerns over the slow impact of public infrastructure investments on productivity.
The report further showed that manufacturers continued to face rising production, distribution and shipping costs during the quarter, even as sales volume recorded a modest improvement.
Despite the challenges, the report noted that manufacturers’ confidence rose by 3.4 points to 52.1 in Q2’26 from 48.7 in Q1’26, but the improvement was driven largely by expectations of better business conditions rather than a significant improvement in the actual operating environment.
Looking ahead, manufacturers were more optimistic about the third quarter, projecting business conditions at 55.6, employment at 55.2 and production conditions at 63 points.
Commenting, Director General of MAN, Segun Ajayi-Kadir, said the projected improvement would depend largely on policy implementation and measures to ease the cost of doing business.
He called on CBN to reduce the MPR to below 20 per cent to unlock manufacturing growth, improve access to affordable credit, and give priority allocation of foreign exchange to manufacturers.
“Reducing financing and production costs was critical to converting the renewed confidence among manufacturers into actual increases in output, investment and employment,” he stressed.
Speaking on the specific government policies or economic developments that are driving the renewed optimism among manufacturers, with the MCCI showing manufacturing confidence at a 2-year high, Ajayi-Kadir stated: “What has happened in the past is that for two years we have witnessed a lull in terms of how confident manufacturers are. But what we are seeing now is that there’s a departure and it is based not on the experience of real improvement in their condition but in the expectation and that’s based on the fact that we believe that government will follow through on some of its reform measures that are beginning to stabilize the economy.
“For instance, the exchange rate, the tax reform has given hope that we are now going to have a tax system that supports productivity and actually incentivizes it. Even though we currently have a setback that the law is going to take a retroactive effect, we hope that this is resolved otherwise it will just wipe off the confidence that we have in that area.”
Nigeria’s aquatic products have secured zero-tariff access to China’s market of about 1.4 billion consumers under a new protocol, as bilateral trade between both countries reaches $18 billion in the first half of 2026 (H1’26).
The development is expected to boost Nigerian exports and foreign exchange earnings, with Chinese Ambassador to Nigeria, Yu Dunhai, disclosing that Nigerian exports to China rose by 80 per cent in the first half of the year.
The Minister of Power, Joseph Tegbe, who received the Ambassador during a courtesy visit and reception following the signing of the Nigeria-China Aquatic Products Protocol, urged Nigerian exporters and businesses to move swiftly to take advantage of the new market-access opportunity.
In a statement the ministry said the protocol was concluded after nearly five years of negotiations and grants eligible Nigerian aquatic products zero-tariff access to the Chinese market.
Welcoming the Chinese Ambassador, Tegbe expressed appreciation for his continued support for the Nigeria-China Strategic Partnership and efforts to deepen trade and business relations between both countries.
The Minister noted that bilateral trade had reached $18 billion in the first half of 2026, compared with $28 billion recorded for the whole of 2025.
He said implementation of the aquatic products protocol would further strengthen economic ties and help fast-track other initiatives, including the Zero Tariff Agreement for African countries.
Tegbe therefore urged Nigerian exporters and businesses to move quickly to take advantage of the new market-access opportunity. Ambassador Yu reaffirmed the Chinese Embassy’s commitment to supporting implementation of the protocol and facilitating the entry of qualified Nigerian aquatic products into the Chinese market.
He described Tegbe’s appointment as a testament to his leadership, vision and pragmatism, while citing a 35 per cent increase in bilateral trade and an 80 per cent rise in Nigerian exports in the first half of 2026 as evidence of the significant potential for further cooperation.
The Ambassador also assured the Minister of the Chinese government’s support for Nigeria’s efforts to modernise and expand its power system.
By Emma Ujah, Abuja Bureau Chief
The Office of the Tax Ombud (OTO) is set to launch a Taxpayer’s Bill of Rights and Obligations in the coming weeks as part of efforts to deepen taxpayer awareness, promote fairness and strengthen trust in Nigeria’s tax administration.
The Tax Ombud and Chief Executive Officer of OTO, Mr. John Nwabueze, disclosed this, yesterday, at a stakeholders’ engagement in Abuja.
Nwabueze said the Bill would give taxpayers a clear understanding of their rights and responsibilities while setting out the standards of fairness, transparency and accountability they should expect from tax and revenue authorities.
According to him, the document would be made available through the OTO’s digital platforms and other public channels.
He said: “We believe this will strengthen taxpayer awareness, encourage voluntary compliance, prevent disputes and build greater trust across the tax ecosystem.”
‘We’ll ensure fairness in tax administration’
Describing the stakeholders’ engagement as a key component of the OTO’s taxpayer rights campaign, Nwabueze vowed that the office would work to ensure a fair, transparent and responsive tax system.
He said a simplified and equitable tax system was critical to building a new national consciousness and restoring public trust in tax administration.
“This is not simply about discussing taxation and revenue. It is about strengthening the relationship between the taxpayer and the institutions responsible for administering public revenue,” he said.
Nwabueze said OTO had commenced a structured public awareness and stakeholder sensitisation programme to improve understanding of its mandate, services and the rights available to taxpayers.
He explained that effective protection of taxpayers’ rights depended on citizens knowing those rights and understanding where and how to seek redress.
The Tax Ombud disclosed that Nigeria’s OTO was the third such institution established in Africa and the ninth globally, placing the country within a broader international development in modern tax administration.
By Yinka Kolawole
India-Nigeria bilateral trade rose by 26 per cent to about $9 billion in 2025–26, from $7.13 billion recorded in 2024–25, as economic ties between both countries deepen beyond oil and commodities into manufacturing, healthcare, energy, technology and job creation.
The Indian High Commissioner to Nigeria, Abishek Singh, disclosed that more than 200 Indian companies currently operate in Nigeria and have created nearly 100,000 jobs, making Indian businesses the second-largest employers of Nigerians after the Federal Government.
The expanding corporate presence also signals a shift from an export-driven relationship towards local production. Indian companies are increasingly establishing manufacturing and production facilities in Nigeria across pharmaceuticals, power, construction, consumer goods, healthcare and other services. With healthcare is emerging as a major area of cooperation, India’s Deputy High Commissioner to Nigeria, Vertika Rawat, said Indian pharmaceutical exports to Nigeria reached $315 million in 2024–25, with India accounting for about 40 per cent of Nigeria’s pharmaceutical imports and more than 90 per cent in some medicine categories.
She put Indian investment in pharmaceutical manufacturing in Nigeria at about $4 billion, reflecting growing efforts to produce medicines locally rather than rely mainly on imported finished products. The trend is expected to support skilled employment, strengthen supply chains and improve domestic production capacity.
The economic relationship between both countries, which dates back more than six decades, was elevated to a Strategic Partnership in 2007. Political engagement has also intensified, with President Bola Tinubu visiting India for the G20 Summit in 2023 and Prime Minister Narendra Modi visiting Nigeria in November 2024.
Beyond private investment, India has provided development assistance, concessional financing and technical training through its Indian Technical and Economic Cooperation programme. The expanding partnership offers Nigeria access to Indian capital, technology and expertise to boost productive capacity.
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