The Nigerian manufacturing sector is set to rebound in 2025 as stakeholders express optimism about improvements in the foreign exchange market and a reduction in inflationary pressures.
Industry leaders anticipate a more stable foreign exchange (FX) market and ease in inflation, which they believe will drive growth and improve operational predictability.
“We are hopeful for a stable FX market and relief from inflationary pressures,” stated Sola Obadimu, Director General of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA). He emphasized that a stable FX market would enable manufacturers to plan and budget effectively for inputs and outputs, while declining inflation rates could lower monetary policy rates, benefiting businesses.
Obadimu projected a resurgence in manufacturing growth, noting that FX volatility and inflation were significant hurdles in 2024. Stability in these areas, he said, would be crucial to the sector’s recovery.
The Central Bank of Nigeria’s (CBN) introduction of an electronic FX trading platform in December 2024 has brought calm to the FX market. On Wednesday, the naira traded steadily at N1,539.4/$ at the Nigeria Autonomous Foreign Exchange Market (NAFEM), according to CBN data.
Segun Ajayi, Director General of the Manufacturers Association of Nigeria (MAN), forecasted a 10% growth in the sector, dependent on FX stability and government revisions to electricity pricing and tax mechanisms. Ajayi also highlighted the expected implementation of a new minimum wage and fiscal policy reforms, which he believes will boost consumer purchasing power and drive manufacturing growth. “If these measures are executed, we anticipate about 10% growth in the manufacturing sector,” Ajayi said.
Similarly, Gabriel Idahosa, President of the Lagos Chamber of Commerce and Industry (LCCI), projected moderate growth for the sector in 2025. He attributed this to improved infrastructure, enhanced access to FX, and government initiatives promoting local production. “With increased support for domestic production and reduced reliance on imports, the manufacturing sector is poised for moderate growth in 2025,” Idahosa noted.
Idahosa acknowledged the sector’s struggles in 2024, including its 8.9% contribution to GDP, which was hampered by inflation, FX volatility, and energy shortages. However, sub-sectors like food processing and textiles demonstrated buoyancy, driven by domestic demand.
He called on the federal government to prioritize policies that ensure price stability, improve ease of doing business, enhance fiscal sustainability, and manage national debt. These measures, he said, would foster sustainable economic growth and improve the standard of living for Nigerians.
In 2024, FX volatility, energy costs, and rising food prices pushed inflation to a 28-year high of 34.6% in November, as reported by the National Bureau of Statistics (NBS). These challenges slowed the manufacturing sector’s growth to 0.92% in the third quarter of 2024, a 0.48% decline from the previous quarter.
