High costs for power, credit, and logistics hinder Nigerian manufacturing competitiveness
via Punch Nigeria4 min read
Nigerian manufacturers face significant competitive disadvantages due to high costs for electricity, credit, and logistics, according to Kamar Bakrin, Executive Secretary of the National Sugar Development Council. He stated that Nigerian factories pay two to ten times more for these inputs compared to counterparts in countries like Vietnam and China. Bakrin highlighted that the primary challenge for Nigerian manufacturers is the cost of production, not weak demand. For instance, industrial electricity costs about 15 cents per kilowatt-hour on Nigeria's national grid, rising to nearly 30 cents with diesel generators, compared to 8-10 cents in Vietnam and China. Nigerian manufacturers spent an estimated ₦1.34 trillion generating their own electricity last year. Working capital costs are also substantially higher in Nigeria, at 27-35 percent, versus 9 percent in Vietnam and 3 percent in China. Nigeria ranks 88th out of 139 countries on the World Bank’s Logistics Performance Index, far behind Vietnam 43rd and China 19th. As a result, manufacturing contributes barely 8 percent to Nigeria's GDP, and capacity utilization has fallen to 57.7 percent. Bakrin emphasized that while macroeconomic reforms have brought stability, the focus must now shift to industrial competitiveness. He proposed four key targets: power delivered to industrial clusters at 8-10 cents per kilowatt-hour, single-digit industrial lending, port clearance in under seven days, and doubled output per worker by 2030.
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