Manufacturers want power, tax reforms, to grow factory output for competitiveness

Manufacturers want power, tax reforms, to grow factory output for competitiveness

Nigerian manufacturers want urgent power and tax reforms to lift their factories’ output after firms spent N1.35 trillion in alternative energy generation in 2025.

At BusinessDay’s Manufacturing conference 2026 in Lagos, they argued that Nigeria’s electricity reforms have done little to cushion the adverse effects of poor electricity distribution caused by an inefficient national grid capacity.

They noted that fixing energy infrastructure, cutting tax costs, and improving logistics will help boost their output and competitiveness.

“Electricity supply is irregular, and manufacturers have to solve for alternative power. 35 percent of production costs go to energy,” said Oluchi Odimuko, assistant director, Sectoral and Regulatory Affairs at the Manufacturers Association of Nigeria (MAN), representing Segun Ajayi-Kadir, the director general.

Nigeria’s Electricity Act of 2023 transferred regulatory authority to state governments and approved a N3.3 trillion legacy debt settlement for power plants.

Yet the country currently struggles to meet five percent of what it needs, leaving millions without reliable power and factories reliant on alternative power sources, including costly generators.

“The capacity needed to light up Nigeria is about 100,000 megawatts. We’re currently doing between 4,000 and 5,000 MW,” said Ruth Owojaiye, director of corporate and regulatory affairs, British American Tobacco (BAT) Nigeria.

Her company has had to rely on solar panels and Compressed Natural Gas (CNG) to survive the power scarcity. “We do 1.4 megawatt solar panels. We also do 100 percent CNG,” she said.

“But not all businesses can do what we are doing, which is what the problem is,” she admitted. “People want to do manufacturing, they want to sell here in Nigeria, they even want to export. But that power is lacking.”

Nigeria’s power infrastructure is as old as the country itself, but a lack of “maintenance culture” as observed from continental peers erodes the little gains of the frail structures.

“The asset for electricity in Nigeria is almost or even a lot more newer than South Africa, but their asset management for electricity is still very good and they can generate much more electricity than Nigeria,” Owojaiye said.

South Africa generates 68,000 MW per day with the state-owned utility, Eskom, generating roughly 95 percent.

Manufacturers at the conference also identified multiple taxation as a chink in the sector’s armour.

One MAN study found that manufacturers pay over 60 different taxes and levies, making local production increasingly expensive and less competitive.

Owojaiye explained that manufacturers are often forced to pay for multiple compliance systems, including duplicated tax stamp requirements introduced by different agencies pursuing similar objectives.

The new tax reforms promised some relief, cutting down taxation by over 90 percent to nine. However, since its implementation in January, it has largely underdelivered as states have stalled in enforcement, MAN said. The association said it is in consultation with the Lagos state government and hopes for respite.

“We are hoping that it will be fully implemented by the Lagos State Government. We are also encouraging other sub-nationals to pull that line because it will help reduce as much as possible the tax burden on the manufacturing sector,” Odimuko said.

In February, the Ministry of Trade and Investment launched the Nigerian Industrial Policy, part of which aims to drive Nigeria’s manufacturing sector growth from nine percent, according to the latest GDP figures, to 25 percent by 2030.

The Lagos state government had also unveiled its Lagos State industrial policy for 2025 to 2030, in what it described as a “roadmap designed to deepen industrial productivity, attract long-cycle investment and strengthen MSME participation in value chains,” according to Folashade Ambrose-Medebem, commissioner of Commerce, Cooperatives, Trade & Investment for the state government.

But manufacturers say Nigeria’s ambitions will need to bear fruit.

“How quickly can we convert that paper into what impacts the manufacturer is the question,” Owojaiye of BAT said. “Because there is so much to manufacture, all the resources, both FMCG, minerals, whatever it is. Both policies need to work for people to be able to create this product, generate profit, and eventually create the prosperity that Nigeria needs,” she said.

Frank Aigbogun, publisher of BusinessDay, who was represented by Innocent Unah, Deputy Editor-in-Chief, also asserted that no major economy has achieved growth-based prosperity, technical advancement, and industrial resilience without a strong manufacturing base.

“The posture of the Lagos State government in response to this one intervention is partnership and sustained reform,” Ambrose-Medebem said in her message. “So through stronger collaboration between government, industry, investors and development partners, we can, and we will build an industrial economy capable of driving competitiveness, innovation and inclusive growth across Nigeria and the wider African continent,” the commerce commissioner added.