By Merit Ibe
As President Bola Tinubu marks his second year in office today, the promise of economic bliss after disruptive economic reforms is yet to materialise in the manufacturing sector.
Prolonged delays in policy implementation are clouding the outlook for manufacturers, dimming their hopes for renewed growth and stability in a challenging economic landscape.
Although experts agree that the incumbent administration inherited an ailing operating system, things have gone downhill despite bogus promises made to manufacturers who are major employers of labour.
However, despite President Tinubu’s assurances that his economic reforms are yielding results, manufacturers argue that the policies have been largely counterproductive for the sector. Stakeholders say the reforms, though necessary in principle, have created an increasingly hostile business environment. Many of the policies, they claim, were poorly sequenced and lacked adequate cushioning measures, leading to soaring production costs, dwindling consumer demand, and widespread operational challenges. As a result, several industries have shut down or relocated, while those still operating are doing so under extreme pressure. One operator summed up the situation, saying, “The policies are stifling our businesses instead of supporting growth. We’re struggling to stay afloat.”
On assumption of office, President Tinubu made many sweeping policy pronouncements, chief of which was the petrol subsidy removal.
The announcement plunged the nation into a dire situation, jerking up the price of fuel from almost N200 to N540 per litre, and today it’s almost N1,000.
Also, the naira depreciated to N1,579.40 per dollar recently, from N460.702 in the same period two years ago.
As months progressed, Tinubu’s administration reeled out more policies in the bid to reform and stabilise the economy, but the ripple effects of some of these policies were the surge in inflation, with hikes in prices of transportation, food, and the cost of goods and services, inflicting more hardship on Nigerians.
His reforms came with a huge price, borne majorly by the masses, as the country is currently grappling with a hunger crisis and high poverty level, among other issues.
Despite how imperative the reforms are, they inflicted significant pain on the citizens, adversely impacted businesses, and affected profit margins; the cost of production escalated, many businesses were thrown into lost positions, and some businesses—especially the large ones—exited the country.
Some businesses collapsed as a result of the shock of the reforms. So, the cost of the reforms has been phenomenal. At the individual level, it has had a devastating effect on the well-being of the people.
The cost of living has been so badly impacted by the reforms, which triggered serious inflationary pressure and automatically eroded the purchasing power of citizens.
With high inflation, which climbed to 23.71 percent in April 2025 from 22.22 percent in the same period in 2023, the purchasing power of the majority of Nigerians was also being eroded, particularly affecting all households. Reports have shown that the number of people living below the poverty line in Nigeria today has doubled.
Inflation has remained high, driven by factors such as supply chain disruptions, exchange rate volatility, and increased fuel prices.
Part of the policies launched in its efforts to reform and diversify the economy, while revitalising sectors, particularly agriculture, manufacturing, and technology, was the Economic Recovery and Growth Plan (ERGP).
The plan, they believe, will help stimulate economic growth through targeted investments and reforms. With several initiatives being implemented to improve the business environment, attract foreign direct investment, and support small and medium-sized enterprises (SMEs), yet the effects are yet to be seen.
Rebasing inflation to achieve a significant drop in numbers did not work, as prices have never really gone down. Some prices are still very prohibitive—three times higher than what this government met in 2023.
Though the inflation figure dropped in May to 23.71%, Nigeria’s macroeconomic conditions remain harsh due to the persistent inflationary pressures, fuelled by exchange rate volatility, rising fuel and logistics costs, and deep-rooted structural challenges, including insecurity and disruptions in food production.
Also, Nigeria’s tax-to-GDP ratio has long languished below 7%—one of the lowest in the world—due to poor compliance, informal economic dominance, and inefficient collection systems.
Tinubu’s administration moved to change this by inaugurating the Presidential Committee on Fiscal Policy and Tax Reforms, led by Taiwo Oyedele. The committee is to review the tax code and also harmonise levies, digitise tax infrastructure, and eliminate multiple taxation that strangles small businesses. The objective is to make tax compliance easier, fairer, and more productive.
Despite these achievements, Tinubu’s administration presented so many challenges, including the insecurity issue. Security threats like kidnapping, insurgency in the northeast, banditry in the northwest, and communal conflicts in other regions continue to be on the rise.
The persistent security challenges have affected economic activities, particularly in agriculture and the manufacturing sector, due to numerous people being displaced from their homes and farmlands.
Nigeria still suffers from massive electricity shortages under Tinubu, which has crumbled industries with high production costs.
No economy thrives with an encumbered real sector. Nigeria’s unfriendly Ease of Doing Business has multiple taxations and high energy costs as pivots.
Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, noted that the manufacturing sector is increasingly being burdened beyond its well-known resilience thresholds.
The association has continued to cry out over some policies, levies, fees, duties, and high interest rates that have stifled their operations.
Ajayi-Kadir emphasised that de-industrialization was looming if necessary actions are not taken to reposition the manufacturing sector.
“The results of our quarterly Manufacturers CEO Confidence Index have continued to show less optimism about the outlook of the sector. De-industrialization stares us in the face.
“We should not be heading in a different direction when most governments across the world are aggressively promoting their industrialization agenda and pushing highly nationalist agenda to grow their domestic production.
“We had expected that, in line with the prevailing economic reform agenda of government that seeks to streamline fiscal policies and engender a progressive and business-friendly tax regime, we should be experiencing a demonstrated aversion to the introduction of fees and levies by government agencies and institutions. This is the time for all government institutions to recommit to the reduction of the cost of doing business; expanding the scope of businesses and incentivizing new entrants in the face of high business mortality.”
He lamented the current interest rate regime which has constrained finance costs for its members, surging by over 44 percent from N1.43 trillion in 2023 to N2.06 trillion in 2024 and rising. The high cost of credit has not only diminished the flow of investments into the manufacturing sector but has also dulled the return on existing investments, with small and medium industries hit the hardest.
“Access to affordable credit is the oxygen that sustains industrial growth, and no economy has ever grown by starving its manufacturers of oxygen.
“Confidence in the industrial outlook has waned, as evident in the dip in the Manufacturers CEO’s Confidence Index from 50.7 points to 48.3 points. This mirrors the growing anxiety of our manufacturers.
“A nation that woos foreign portfolio investors at the expense of its real sector may unwittingly be aspiring to build prosperity on the back of volatility.
“We are disturbed by the implicit prioritization of short-term foreign capital inflows over the long-term health of domestic industries. While maintaining a high interest rate of 27.5 percent may temporarily attract speculative foreign portfolio investors, it is doing so at the expense of Nigeria’s manufacturing base, which is now choked by unsustainable borrowing costs.
Stakeholders emphasise the urgent need for a more robust and comprehensive strategy to tackle the root causes of Nigeria’s insecurity—chiefly poverty, unemployment, and social inequality. They stress that President Tinubu’s administration must adopt policies that foster economic stability, control inflation, and safeguard the most vulnerable populations. This involves boosting domestic production, managing currency volatility, and providing targeted subsidies or support programs.
Despite these intentions, Nigeria remains deeply entrenched in poverty, with significant challenges persisting in implementation, security, and economic pressures. Effective governance and continued collaboration among all stakeholders will be crucial to overcoming these obstacles.
Ehimigbai Omokhia, a manufacturer and executive of the Export Group of the Manufacturers Association of Nigeria (MANEG), criticized the government’s handling of subsidy removal and naira floatation policies, attributing the current economic woes to poor management. He lamented that “the excess money made on the removal of subsidy is not felt in the economy.”
Omokhia further highlighted the prohibitive cost of capital, noting, “Bank lending rate at over 27% is too high and will not encourage investment. Inflation rate at over 23% is also too high. Borrowing in China and Spain is at 3%, while in South Africa, it’s around 11%.” He condemned what he described as government profligacy: “This current government is very wasteful. They keep spending going abroad to seek foreign investors while the local investors are badly treated. No foreigner will come and invest when you are not supporting the ones you currently have.”
He also pointed to enduring infrastructural challenges, stating, “The issue of power is still there. CNG, which was to be an alternative, is not readily available. Exchange rate is still very high at between N1,500 and N1,600 to the dollar.” On trade policies, Omokhia insisted, “Rather than encourage the use of made-in-Nigeria goods, government is still wasting forex on imported goods.” He called for a stronger push to promote local products, insisting, “Government needs to encourage consumption of made-in-Nigeria items to promote our local industries.”
Reflecting on the current state of affairs, he observed, “There has been no gain. But to those in authority, there have been so many gains. Government at the centre and states get so much today, but it is not felt on the streets because of the profligacy of those in power.”
On a more optimistic note, Dr. Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise (CPPE), acknowledged the Tinubu administration’s achievements in stabilizing the economy over the past two years. He remarked, “The administration used the last two years to fix economic fundamentals and stabilize the economy.”
However, Yusuf pointed out that the reforms have come with a heavy cost for ordinary Nigerians: “The bigger issue is the cost of living, which has been so badly impacted by the reforms. Because the reform has triggered very serious inflationary pressure. And inflationary pressure typically erodes purchasing power. It erodes real income. That is why we have so much poverty. And again, we have seen a lot of elevated levels of income inequality.”
He emphasized the need for a recalibration of policies, saying, “These are the things that we need to calibrate—our fiscal and monetary policies and possibly even trade policies to address. We need to calibrate all the calibrators of fiscal policy.”
According to Yusuf, the overarching economic goal should be to “improve the standard of living, to reduce the cost of living, and to improve the access of the majority of the citizens to basic needs. Basic needs, affordability of basic items like food, pharmaceutical products, transportation, education, and housing—those are the basic needs.”
He explained that the initial phase of this administration was primarily focused on stabilization: “The first few years were essentially about trying to stabilize the economy because the economy was practically on the brink. That is what it is.” Acknowledging the challenges ahead, Yusuf stressed, “I must admit that the cost of living has gone completely out of hand. Something has to be done within the context of policy.” He noted some positive signals: “Now that we are beginning to see some improvement in the macroeconomic environment, the stability in the macroeconomic environment, and the slight deceleration of inflation, substance needs to be taken out to deal with the issue of the cost of living. I think that is foremost; that is what is paramount at this time.”
He reflected on the previous administration’s failures, pointing out, “We had a situation at the inception of the administration where we had a dysfunctional FX regime and scandalous management of fuel subsidy and the downstream sector. These two were the undoing of the economy before the administration.”
Yusuf highlighted progress made during Tinubu’s tenure, despite ongoing challenges: “The challenge of stabilization has taken the attention of the administration in this period, which should say other programmes should not have taken place. Some of these have begun to take shape, and some are beginning to yield outcomes.”
He acknowledged the toll inflation has taken on poverty but remains hopeful: “We had an aggravated situation of poverty as a result of spiking inflation. But the good news is that some progress has been made in terms of stabilizing the economy following the reforms.”
On foreign exchange markets, he noted, “Major stability in FX markets over the last ten months—there has been minimal volatility, which has boosted investors’ confidence.” Fiscal management has improved as well: “Improvement in fiscal sustainability as the finances of the government have improved significantly, although the spike in inflation has diminished the value of those increases, but nonetheless, the fiscal position of the government at all levels has improved. The government at all levels has more to spend, but whether the money is trickling down to the vulnerable segment of the society is a different matter.”
Yusuf also highlighted progress in critical sectors: “Some progress with the refineries, Port Harcourt and Warri, although they are epileptic. The Dangote Refinery commenced production. There are efforts to support domestic refinery by this government.” On business performance, he added, “Businesses are returning to profitability after losses in the first year of this administration: returns on investment in the non-oil sector.”
Lastly, he noted a key macroeconomic indicator: “Under the administration there is an improvement in net external reserves, which, according to the Central Bank of Nigeria, is now $23 billion. It is a confidence-boosting development.”
“Insecurity in the country has not abated, especially in the last six months.
“Going forward, the government has the responsibility to ensure much more impactful measures to address the phenomenon of the cost of living for the ordinary people.
“The deployment of policy and recalibration for fiscal, monetary, and trade policies to the democratisation of the policies.
“The development must trickle down. A change of strategy in dealing with security.
“We have to deal with the prohibitive interest rate of 27.50 percent to address the challenges of market failure.
For the Lagos Chair, National Association of Small Scale Industrialists (NASSI), Gertrude Akhimien, the current administration has brought about many pains and gains.
Akhimien noted that some of the gains which included the removal of fuel subsidies and the floating of the Nigeria currency aimed at stabilizing fuel prices and bringing some stability to the Naira, brought about untold hardship to the economy.
“There is massive inflation of up to 28% and prices of fuel which is used by a majority of people have risen beyond the reach of the average citizen.
“The government had promised palliatives to cushion the effects of inflation and the hardship it has caused but these measures are still being awaited.
“In the manufacturing sector, the transport costs have increased the cost of raw materials affecting the production costs of goods. Sadly, consumer spending has also reduced as they don’t have disposable income and most families concentrate on their priorities.
“The intervention of government to ease the burden of inflation on MSME has not come through and small businesses are closing down daily.”
She appealed to governments at all levels to make good their promises to provide grants to micro small and medium enterprises (MSMEs) for their survival.
“The rains have commenced. Any assistance to the MSMEs should be provided so that farmers can plant their crops and manufacturers can procure raw materials for their production. This will reflate the economy and create jobs for our teeming population.
A Sales and Marketing expert, Dapo Omojola, agreed that the subsidy removal and the exchange rates unification were gains, even as painful as they may be.
“The removal of fuel subsidies ensured more revenue for government and of course the exchange rates unification brought a form of liberalization to correct all the anomalies in the forex which ultimately is intended to attract foreign investments.
“A lot of international financial bodies have applauded that, but it’s such a very painful pill to swallow.
Government also is making efforts to expand access to credits. There is the school students’ loan and there are others in the works targeted at women and youths.
“Another gain that we could point to in the last two years is infrastructure development. For example the Lagos Calabar project, which is fast advancing in such a significant step towards improving cross-country connectivity and trade relations. So that’s a plus and government is also looking at foreign direct investment inflows.”
He noted that despite all these challenges, Nigeria was still able to secure about 2.2 billion dollar loan from the world bank to support the economic reforms and alleviate poverty.
“We shouldn’t forget also the payment of the IMF loan.”
Omojola, however noted that the pains are more visible.
“The inflation and the cost of living were an immediate aftermath of subsidy removal and currency devaluation.
“It led to high inflation which is reported to hit an almost 30 year all-time high. Fuel prices almost tripled, basic foods became unaffordable.
“So, no matter how much of the things done at the micro or the macro level if it doesn’t result to significant changes on the dining tables across the country people will not really appreciate it as much.
“The manufacturing sector also is struggling with rising cost of input for manufacturing, energy cost is growing up, borrowing cost is high, exchange rates have become such a complexity and that has led to the exit of a number of multinational companies from nigeria.
“People are discontent with the trend of things people are beginning to shrink economically and otherwise. The hardship is widespread and of course it has its social implications.
“For those who are also talking about the insurgency rates, banditry and all that who believe that the kinetic approach will not work, part of the things they finger as the immediate solution to uprising is amelioration of poverty. Let poverty rate reduce, let people be able to eat, take care of themselves and the tendency for crime will drop.
“For the manufacturing sector, their major challenge is the operational cost which includes the burden of powering their plants that’s energy supply.
“Energy tariffs have gone through the roofs , the scarcity of foreign exchange and a whole lot of infrastructure deficits, no good roads, transportation not flowing. All these things have a way of impeding the efficiency and competitiveness of industries.
“Nonetheless, there are things to look forward to, like the effort of the administration to provide single digits interest loans to SMEs, that would be good.
“MSMEs can have access to single-digit loans and it will drastically reduce the effects of the high cost of borrowing.
“A further push of the CNG you know will reduce operational costs and stimulate manufacturing growth.
“A lot of policy reforms ongoing like the tax reforms will help to create a more conducive environment for manufacturing and also attract investments.
“As we journey to the other half of the first term of this administration, one will be looking forward to seeing a more stabilized economy, with their present monetary and fiscal policies, so that they can stabilize the economy the more. We look forward to more infrastructural development, completing the existing ones, like the lagos calabar coastal way, embarking on other new ones, of course one will also strongly be looking forward to diversification of the economy, where we begin to reduce the dependence on oil, boost agric and grow sustainably.
“The two years has been a mix of ups and downs , highs and lows, but I want to give the government the benefit of doubt, so one expects to see a more profound result at the end of the four years.”