Market News

Nigerian manufactured goods are being priced out of global markets by elevated production and logistics costs, constraining the country’s push to diversify away from oil.

The high cost of energy, finance, transportation and taxes is inflating factory-gate prices and eroding export competitiveness, Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria, said at the 9th annual general meeting of the MAN Export Promotion Group (MANEG) in Lagos.

Africa’s most populous nation recorded N3.73 trillion in non-oil exports in the second quarter of 2026, but the bulk of the growth still comes from raw commodities, with manufacturers struggling to scale value-added exports amid port congestion, poor road infrastructure and trade bottlenecks that have limited gains from the African Continental Free Trade Area.

“These costs increase the price of Nigerian-manufactured products and make them less competitive in international markets,” Kadir said.

He added that improving export performance requires attention to cost structures and barriers preventing firms from adding value to locally sourced raw materials.

Logistics remains a major drag on competitiveness, he said, citing poor road infrastructure, high transportation costs, port congestion and trade-related bottlenecks that increase the time and cost of moving goods from factories to markets compared with rivals operating more efficient systems.

In his presentation, Kola Awe said Nigeria missed earlier industrial revolutions after pursuing import substitution while Asian economies built export-oriented industries, leaving control of regional distribution channels to foreign trading houses that still dominate formal West African trade.

He said the vacuum left 65 percent of traders across Africa as Nigerians operating informally, hauling goods by road to markets from Burkina Faso to Congo.

That informal trade, he said undercuts formal exporters who pay duties and taxes, creating grey market flows that depress prices in markets such as Benin and Togo.

Awe put Nigeria’s infrastructure deficit at 35 percent, interest rates above 23 percent and logistics costs at 26 to 30 percent of free-on-board value, with poor roads, port congestion and limited rail — only 10,000 of 2.1 million containers moved by rail in 2025 — adding up to two months dwell time at Apapa and Tin Can ports.

He said value addition is the only path to scale, citing cashew where raw nuts fetch about $1,000 per ton versus $10,000 per ton for kernels, and warned that without it Nigeria’s cassava and cocoa output translates into minimal export earnings compared with Vietnam and Starbucks’ multi-billion dollar derivative sales.

To unlock growth, he urged exporters to leverage duty-free windows including China’s two-year zero-tariff for African goods, Britain’s Developing Countries Trading Scheme and the African Continental Free Trade Area, while using authorised economic operator status, dedicated truck call-up lines and trade houses to cut transit time and cost.

In her keynote address, Jumoke Oduwole, minister of Industry, Trade and Investment, said the challenge is to shift growth from raw commodities to manufactured and value-added goods, warning that cost competitiveness now determines whether ready markets translate into sustained exports.

Oduwole who was represented by Nura Yusuf, a director at the ministry, said government is pushing implementation of its industrial policy and trade facilitation reforms, including the Nigeria Single Window Trade Portal for customs, NAFDAC e-licensing and SON services, and targeted support through the Nigerian Export Promotion Council’s export expansion grant and export development fund.

She described the African Continental Free Trade Area as a $3.4 trillion market of 1.4 billion people, but said access alone is not enough without productivity, standards compliance and rules-of-origin readiness, urging MANEG to present evidence-based, sector-specific constraints to the Industrial Revolution Working Group for actionable intervention.

In her welcome address, Ruth Owojaiye, chairman MANEG, said the country’s operating environment remained challenging for manufacturing exporters despite signs of improved macroeconomic stability, with high inflation, interest rates, energy and logistics costs, inadequate power and insecurity pushing up production costs.

Manufacturers still face high financing costs, infrastructure gaps and regulatory bottlenecks that weaken competitiveness of Nigerian goods in regional and global markets, limiting export expansion and constraining the sector’s contribution to growth, she said.

Owojaiye urged the federal government to prioritize lower costs of doing business, affordable export financing, improved power and transport infrastructure, streamlined export procedures and stable incentives for export-oriented manufacturers to boost non-oil earnings and advance economic diversification.

Nonye Ayeni, chief executive, Nigerian Export Promotion Council, said Nigeria recorded its highest-ever non-oil export volume and value in 2025, with the number of products and destinations also hitting records, and value-added exports rising to over 50 percent of shipments.

She said sustaining the momentum requires scaling production through backward integration and enforcing quality standards, noting Nigeria remains the world’s top producer of shea and a leading producer of cassava, cocoa and cashew yet trails smaller West African peers on output due to lack of coordinated production clusters.

Ayeni said the council is working with the WTO and ITC to fund certifications for exporters including FDA, HACCP and ISO 22000, and urged manufacturers to target opportunities under the African Continental Free Trade Area.

She described the regional trade bloc as a 1.4-billion-person market, while pushing formalization of informal trade through data collection across border corridors.