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High production costs threaten competitiveness of made-in-Nigeria goods, says MAN

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MAN's Director-General explained that high production costs have reduced the competitive level of Nigerian-produced products and imported products.MAN attributed the challenges in competing with imported products to high production costs in Nigeria. Credit: Leadership News
  • The Manufacturers Association of Nigeria (MAN) identifies steep production costs as a key barrier to the competitiveness of Nigerian-made goods in local and international markets
  • While exporting offers potential for profit and economic growth, high operational costs and export delays hinder Nigerian manufacturers from seizing global opportunities
  •  MAN urges the government to implement favourable import duty rates and address rising power and interest costs to ease the burden on local manufacturers and boost competitiveness

The Manufacturers Association of Nigeria (MAN) has sounded an alarm over Nigeria’s steep production costs, calling it the biggest barrier to the competitiveness of locally-made products. 

MAN’s Director General, Segun Ajayi-Kadir, said Nigerian goods meet international standards, but the hostile operating environment is driving our costs up, making it tough for local manufacturers to rival imported products. This he disclosed to PUNCH on Monday, October 28, 2024.

Ajayi-Kadir explained that while exporting Nigerian-made goods is an “Avenue to earn dollars and boost the economy,” it is challenging when production costs are sky-high. “Export is a golden opportunity, but it is not enough to just get goods on a ship. They must arrive and stand strong in a fiercely competitive market,” he noted.

For Nigerian exports to thrive internationally, both the price and quality must hit the mark. “In a high-cost setting like ours, we are struggling to compete and while favourable exchange rates make Nigerian goods seem cheaper, production costs are still a significant barrier,” he said.

Ajayi-Kadir also highlighted export process delays, noting that products sometimes near their expiry before they leave Nigeria’s ports. 

When products are held back by documentation, inspection bottlenecks, and unnecessary delays, they lose their freshness and value,” he said, emphasising that “Efficiency is non-negotiable” for global competitiveness.

Addressing perceptions of Nigerian goods as inferior, Ajayi-Kadir refuted the claim, attributing it to “Unregulated players” and underscoring that MAN members produce to Nigerian and international standards. 

Without MANCAP (Mandatory Conformity Assessment Programme) certification, no product can enter the market. So, any talk of Nigerian goods being substandard is misguided,” he declared.

Despite their quality, Nigerian goods face hurdles due to steep production costs, especially against imported goods from lower-cost countries. Ajayi-Kadir noted that price sensitivity is rising due to the “Declining purchasing power of Nigerians,” with the average consumer opting for the cheaper, often imported, option.

MAN has been actively advocating for policies to ease the business environment. While acknowledging recent government efforts, including the Accelerated Stabilisation and Advancement Plan, Ajayi-Kadir stressed that ongoing issues like surging power costs and high-interest rates remain crippling. 

“No manufacturer can thrive with electricity costs that have doubled or loans with interest rates soaring to 40 per cent. How can one run a profitable business under these conditions?” he questioned.

Calling for a special rate for import duties, he argued this could lower production costs and curb inflation. “If we can import raw materials at a fair exchange rate—say around N800 to N1,000—it will lower costs for producers and help combat inflation,” Ajayi-Kadir stated.

He acknowledged the Federal government’s efforts, including the Accelerated Stabilisation and Advancement Plan and recent fiscal and tax policy reforms in addressing the issue.

He, however, concluded that the government’s support on these issues would provide essential relief, allowing local manufacturers to stand on equal footing with imported goods and strengthen Nigeria’s manufacturing sector.

Nigeria needs to boost production if it will achieve $1 trillion economy — Bank of Industry

Meanwhile, TheRadar previously wrote on the Bank of Industry (BoI) call for urgent need for Nigeria to enhance its production capacity to achieve a one trillion-dollar economy by 2026. 

This was said by Isa Omagu, Divisional Head of Services at BoI, during the 2024 annual conference of the Finance Correspondents Association of Nigeria, held at Lagos. He highlighted that to reach a $1 trillion economy, we must focus on boosting production capacity.

Also, Oliver Alawuba, Group Managing Director of United Bank for Africa Plc, highlighted the importance of shared responsibility in Nigeria's journey toward a $1 trillion economy.

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Omolade TolaAdmin

Omolade Tola is a freelance writer with over 5 years of experience in creating unique and creative content on various subjects. She is currently a freelance writer at TheRadar.

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