The Executive Secretary of the National Sugar Development Council (NSDC), Kamar Bakrin, has warned that Nigeria’s manufacturing sector is losing its competitive edge because businesses face significantly higher production costs than manufacturers in countries like China and Vietnam.
Speaking during the technical session of the 17th National Council on Industry, Trade and Investment in Enugu, Bakrin said the biggest obstacle confronting Nigerian manufacturers is not a lack of demand but the high cost of producing goods.
According to him, Nigerian factories spend far more on electricity, loans and logistics than their counterparts in many competing economies.
“None of this is a demand problem. Nobody on this continent needs persuading to buy what Nigeria makes. It is a cost-of-production problem — and that distinction matters because costs, unlike demand, are within our power to fix,” Bakrin said.
He explained that industrial electricity costs around 8 US cents per kilowatt-hour in Vietnam and about 10 cents in China, compared to roughly 15 cents on Nigeria’s national grid.
However, manufacturers who rely on diesel-powered generators pay close to 30 cents per kilowatt-hour, making production far more expensive.
Bakrin disclosed that Nigerian manufacturers spent an estimated ₦1.34 trillion generating their own electricity last year.
“Every factory in Nigeria is running a second, unwanted business as a private power station,” he said.
He also highlighted the high cost of accessing credit, noting that businesses in Nigeria pay interest rates of 27 to 35 per cent, compared with about 9 per cent in Vietnam and 3 per cent in China.
On logistics, Bakrin said Nigeria ranks 88th out of 139 countries on the World Bank’s Logistics Performance Index, trailing behind Vietnam and China.
According to him, these challenges have contributed to manufacturing accounting for only about 8 per cent of Nigeria’s Gross Domestic Product (GDP), while factory capacity utilisation has dropped to 57.7 per cent.
Despite the challenges, Bakrin said recent macroeconomic reforms have created an opportunity for industrial growth.
“The government’s macroeconomic reforms have delivered stability… giving factories, for the first time in years, the conditions to plan and invest,” he said.
He also pointed to Nigeria’s urea industry as proof that competitive pricing of industrial inputs can transform local manufacturing.
According to him, the country’s urea production capacity grew from 500,000 tonnes in 2005 to 6.5 million tonnes, making Nigeria one of the world’s top exporters of nitrogen fertiliser.
“The whole lesson is in one sentence: ‘When a country prices inputs as if it wants industry to live, industry lives,’” Bakrin stated.
To improve Nigeria’s industrial competitiveness, the NSDC boss proposed four key reforms, including providing uninterrupted electricity to industrial clusters at lower tariffs, single-digit industrial lending rates, reducing port clearance time to less than seven days and doubling workers’ productivity by 2030.
He also urged every state government to establish dedicated industrial power clusters, harmonise taxes and levies, improve logistics and publish annual industrial competitiveness rankings.
“Every resolution needs a named owner, a date and a way to measure it. Otherwise, it becomes another document that gets filed, framed and forgotten,” he warned.
Bakrin further called on state governments to take advantage of the Electricity Act 2023 by developing competitive power markets, improving access to industrial land and aligning technical education with industry needs.
He said boosting industrial competitiveness would create millions of jobs, strengthen the naira through increased exports and reduce dependence on imports.
“The reform half of Nigeria’s story has been written. The industrial half will be written in kilowatt-hours, lending rates and port days. The window is open. No window stays open forever,” he concluded.
