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By Merit Ibe
Although the incumbent administration of President Bola Tinubu easily claims to have stabilised the economy, Manufacturers in Nigeria and SMEs generally may beg to differ.
They are grappling with mounting economic pressures driven by persistent supply chain disruptions, high borrowing costs, unending energy crisis, volatile exchange rates and weak consumer demand. These factors continue to worsen the operating environment amid rising global tensions.
The challenges are also felt across Africa.
Secretary-General of the Pan-African Manufacturers Association, Segun Ajayi-Kadir, said global manufacturing activity remains sluggish, with Purchasing Managers’ Indices (PMIs) hovering around the 50-point mark that separates expansion from contraction.
Ajayi-Kadir expressed concern over the future of manufacturing in Nigeria and across Africa, noting that hopes for recovery and stability in the second quarter of the year have not materialised.
According to him, the World Trade Organization projects global trade growth of only 1.9 per cent this year due to uncertainty in energy prices and lingering geopolitical tensions.
He explained that African manufacturers are also battling domestic economic challenges, with West Africa remaining the most pressured sub-region. While inflation figures in countries such as Nigeria and Ghana appear to be easing, he said factory-floor costs remain persistently high.
Ajayi-Kadir noted that currency depreciation across several African markets has significantly increased the cost of imported raw materials, machinery and capital goods, especially for manufacturers heavily dependent on imports and with limited access to foreign exchange.
He added that high interest rates continue to constrain industrial growth across the continent.
“Kenya maintained interest rates within the 8.75 to nine per cent range during the first quarter, while Egypt reduced rates slightly from 20 to 19 per cent. Despite these adjustments, borrowing costs remain elevated across Africa, limiting access to credit and discouraging the capital investments needed to boost manufacturing output,” he said.
He stressed that the situation is particularly severe for small and medium-scale manufacturers struggling to cope with rising production costs and weak market demand.
The African Development Bank projects Africa’s GDP growth at about 4.3 per cent in 2026, driven largely by domestic demand and regional trade activities.
Ajayi-Kadir noted that East African countries such as Kenya and Ethiopia have shown relative stability by keeping inflation within manageable levels, although energy and logistics challenges continue to affect productivity.
He said manufacturers must now adopt deliberate and strategic measures to survive the difficult business climate.
According to him, industry experts have identified five key priorities for manufacturers. These include institutionalising cost intelligence through real-time monitoring of input prices and sourcing strategies; improving efficiency through lean manufacturing and digital tools; adopting flexible market strategies to meet weak consumer purchasing power; expanding into regional export markets under the African Continental Free Trade Area framework; and strengthening financial and operational resilience.
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President of PAMA, Mansur Ahmed emphasised that manufacturers must focus on prudent working capital management, diversified revenue streams, cautious debt exposure and flexible production systems to withstand prolonged economic volatility.
Ahmed stated that companies that quickly move from passive survival to proactive strategic planning would be better positioned to gain market share and remain competitive despite the harsh economic environment.
“With borrowing costs still high across the continent almost in the first half of 2026, expanding production through heavy capital investment is becoming less viable. As a result, the focus must shift toward maximising output from existing capacity.
“Lean manufacturing principles offer a clear pathway through the reduction of inefficiencies, elimination of waste, and optimisation of production flows. Hence, companies can increase output without significantly increasing costs. “
He said digital tools can further support this transition like basic automation, production monitoring systems, and data-driven decision-making can help manufacturers identify bottlenecks and optimise performance in real time.
He further reeled out strategies to include : “Demand recovery strategies.
While inflation is easing, consumer purchasing power remains weak across many African economies. This creates a challenging demand environment, where volume growth is not guaranteed and price sensitivity is high.
“One approach is product resizing and price-point innovation, offering smaller, more affordable units to maintain volume in price-sensitive markets.
“Another is diversifying product lines to cater to different income segments, balancing premium and value offerings.
“Manufacturers must also strengthen distribution networks and last-mile delivery systems, ensuring products are accessible across both urban and peri-urban markets.
“In addition, partnerships with distributors, wholesalers, and digital platforms can help expand market reach.
“Critically, manufacturers must shift from supply-driven to demand-responsive production, using market intelligence to align output with actual consumption patterns. Those that can anticipate demand shifts and respond quickly will outperform competitors in a constrained consumption environment.
“With domestic markets under pressure, regional and export markets offer a critical growth pathway. The African Continental Free Trade Area (AfCFTA) presents an opportunity to expand beyond national borders. Consequently, manufacturers must move beyond the idea of export as an afterthought and begin to treat it as a core business strategy.
This starts with improving product standards, certification, and compliance to meet requirements across different African markets.’
“However, collaborative strategies such as cross-border partnerships, distribution alliances, and regional production networks can also help manufacturers scale more efficiently and overcome market entry barriers.
“Strengthening financial and operational resilience
Underlying all these strategies is the need for stronger financial and operational resilience. With macroeconomic volatility likely to persist, manufacturers must build systems that allow them to absorb shocks and adapt quickly.
“Operational flexibility, such as the ability to adjust production volumes, switch inputs, or redirect supply chains, will also be critical in navigating uncertainty.”
