Onome Amuge
As Nigeria celebrated its 65th Independence anniversary on October 1, the air was filled with the usual patriotic reflections and promises of a brighter tomorrow. Yet, beneath the flag-waving and speeches, private sector leaders struck a more sober tone, warning that the state of the economy calls for caution and deeper reflection rather than unguarded celebration.
For the Manufacturers Association of Nigeria (MAN), the Association of Small Business Owners of Nigeria (ASBON), and the Lagos Chamber of Commerce and Industry (LCCI), the anniversary is a milestone that highlights not just national endurance, but also the fragility of businesses under the weight of reforms introduced over the past two years. While they acknowledge that structural reforms were overdue, they argue that the burden of adjustment has fallen disproportionately on households and enterprises, leaving the real sector too weak to play its expected role in driving inclusive growth.
Manufacturing, long considered the heartbeat of any industrialising economy, has been struggling to catch its breath. According to Francis Meshioye, President of MAN, 2024 was another difficult year that showcased the depth of the sector’s challenges.
“In 2024, Nigeria’s manufacturing encountered a myriad of macroeconomic and infrastructural challenges that severely impacted its performance. Inflation, currency depreciation, high interest rates, escalating electricity tariffs, record-low sales, multiplicity of taxes, and security concerns all combined to erode profitability,” Meshioye said.
The numbers tell the story. Manufacturing’s contribution to GDP dropped from 16.04 percent in Q4 2023 to 12.68 percent in Q2 2024, reflecting not just cyclical slowdown but systemic decline. The erosion of consumer purchasing power, driven by inflation that hit 34.6 percent in November 2024, forced many households to cut back on manufactured goods, leaving companies with unsold inventories worth N1.4 trillion.
The floating of the naira, while applauded internationally, pushed the exchange rate from N666/$ in mid-2023 to over N1,700/$ by mid-2024, ballooning input costs for manufacturers reliant on imported raw materials. Add to that the benchmark interest rate of 27.7 percent, and access to financing for expansion became a luxury out of reach for most players.
Perhaps the most stifling burden, however, came from the energy sector. A 250 percent spike in electricity tariffs in 2024 left manufacturers struggling to keep the lights on, forcing many to turn to alternative sources such as diesel or solar at a time when margins were already under strain. “Energy has become one of the highest operating costs for businesses in 2024, crippling competitiveness,” Meshioye said.
If large manufacturers are struggling, smaller enterprises, considered the true backbone of Nigeria’s economy,are in even deeper distress. Femi Egbesola, ASBON president, estimates that over two million small businesses have shut down in the last two years as a direct result of reforms and the economic shocks that followed.
“Small businesses have continued to groan under the heavy burden of multiple taxes, rising costs, and dwindling consumer demand. The impact of reforms on small businesses has been very negative,” Egbesola lamented.
In the meantime, entrepreneurs have adopted survival strategies, from shifting focus to non-oil exports under the African Continental Free Trade Area (AfCFTA) to leveraging technology and cross-border trade in ECOWAS markets. “We are becoming more innovative in the way we run our businesses. AfCFTA and technology are becoming lifelines,” Egbesola explained.
Unlike MAN and ASBON, the Lagos Chamber of Commerce and Industry struck a more balanced note in its assessment. The Chamber highlighted some encouraging macroeconomic trends, noting that GDP growth accelerated to 4.23 percent in Q2 2025, the fastest in four years, while headline inflation slowed to 20.12 percent by August 2025.
“These are positive signs but they do not erase the reality of the harsh business environment. At 65, Nigeria stands at a pivotal juncture. We need to deepen structural reforms that ease the cost of doing business,”the LCCI noted.
The Chamber stressed that without critical investments in power, logistics, and broadband infrastructure, businesses would remain hamstrung, unable to compete regionally or globally. “Benchmark interest rates at 27 percent, weak power supply, high energy costs, and expensive imports create an unsustainable operating environment,” it said.
Nigeria’s economic journey at 65 presents what economists call a reform paradox. On one hand, painful reforms such as the removal of fuel subsidies and exchange rate unification have strengthened fiscal discipline, boosted government revenues, and signaled seriousness to international investors. On the other hand, they have unleashed inflationary shocks, currency volatility, and higher living costs, leaving businesses gasping for relief.
President Bola Tinubu, in his Independence Day address, acknowledged these pains but urged patience. “Yesterday’s pains are giving way to relief,” he declared, citing gains in non-oil exports, stronger reserves, and easing inflation as proof that reforms are beginning to yield results.
But many in the private sector remain unconvinced that relief will come fast enough. The real fear is that without targeted cushioning measures, the very businesses needed to sustain reforms may not survive long enough to reap the benefits.
Stakeholders agree that reforms must continue but insist that government policy must focus on cushioning their effects. Suggestions range from concessionary financing for manufacturers, to targeted energy subsidies for productive sectors, to accelerated implementation of tax reliefs for small businesses.
“The government must think of how to give soft landing to small businesses by cushioning the effects of reforms on their operations,” Egbesola urged. Meshioye added that access to affordable financing and predictable power supply are critical if manufacturers are to weather the storm.
The LCCI emphasised infrastructure investment as the cornerstone of long-term competitiveness. “We must prioritise infrastructure upgrades to support innovation, digital transformation, and industrialization,” the Chamber said.
