MAN Urges FG to Cut Energy, Transport and Tax Costs as Inflation Eases Marginally

The Manufacturers Association of Nigeria (MAN) has called on the Federal Government to intensify efforts to reduce the structural costs of production, warning that the marginal decline in Nigeria’s headline inflation rate has yet to translate into meaningful relief for manufacturers.

MAN made the call in its position on the August 2026 inflation figures, which showed headline inflation moderating slightly to 15.39 per cent, from 15.43 per cent in July, a decline of 0.04 percentage points.

The association described the moderation as a positive development, noting that greater price stability is important for business planning, investment and consumer welfare. However, it cautioned that the marginal improvement remains fragile and should not be interpreted as evidence that the operating environment for manufacturers has significantly improved.

According to MAN, the more important consideration for businesses is not simply the headline inflation rate but the cost of producing goods.

Manufacturers, it said, continue to contend with high energy costs, logistics challenges, exchange-rate pressures, elevated raw-material prices as well as multiple fiscal and regulatory charges.

“Lower inflation does not necessarily mean lower production costs for manufacturers,” the association noted, stressing that the current inflation trend should provide an opportunity for policymakers to shift attention from merely managing inflation to tackling the structural factors that make domestic production expensive.

High Costs Continue to Squeeze Manufacturers

MAN said manufacturers remain under pressure because many businesses are unable to fully pass rising production costs on to consumers, particularly in an environment where household purchasing power remains weak.

As a result, manufacturers are forced to absorb part of the increase in input costs, putting pressure on profit margins while increasing their working-capital requirements.

The association warned that high operating costs could also influence investment decisions, with elevated energy, financing and logistics expenses making new investments less attractive.

Capacity utilisation could equally remain constrained, as some manufacturers may be forced to scale back production or avoid additional shifts when the cost of increasing output becomes commercially unsustainable.

MAN further cautioned that high domestic production costs could weaken the competitiveness of locally manufactured goods against imported products, while prolonged cost pressures could limit the sector’s ability to expand production and create new employment opportunities.

Transport Costs Raise Concern

The association highlighted transportation as a significant component of inflation, noting that the sector contributed 1.64 percentage points to the August inflation figure.

MAN urged the government to identify and prioritise major transport corridors connecting ports, industrial clusters, agricultural production zones and major markets for rehabilitation and regular maintenance.

It also called for greater coordination between the Federal and state governments to eliminate unnecessary road charges and overlapping transport-related levies that add to the cost of moving raw materials and finished products across the country.

MAN Calls for Lower Energy Costs

Energy costs remain another major concern for the manufacturing sector.

MAN urged the government to introduce measures capable of reducing the amount manufacturers spend on energy for each unit of output. Among the measures proposed are dedicated and reliable electricity supply for major industrial clusters, priority access to gas for industrial users, incentives for investments in efficient captive power and renewable-energy systems, as well as a review of electricity tariff structures affecting productive industries.

The association said the effectiveness of energy reforms should ultimately be measured by whether manufacturers can produce goods at lower energy costs, rather than simply by increases in electricity generation.

Tax Reform Must Support Local Production

MAN also called for effective implementation of the relevant provisions of the new tax laws, with emphasis on equity, fairness and transparency.

The association urged the government to eliminate multiple taxation and overlapping levies, while ensuring that tax reforms do not inadvertently increase the fiscal burden on local manufacturers.

It argued that a more predictable and streamlined tax environment would help businesses plan investments, manage costs and improve competitiveness.

MAN Backs Nigeria First Policy

The manufacturers’ body also called for effective implementation of the Nigeria First Policy, particularly through greater preference for locally manufactured products in government procurement.

According to MAN, increasing public-sector demand for locally produced goods could strengthen domestic manufacturing, support local value chains and encourage greater investment in productive capacity.

The association further recommended the introduction of a targeted, long-term manufacturing financing window at below-market rates, particularly for micro, small and medium-sized manufacturers.

The proposed financing should support working capital, machinery acquisition and productivity-enhancing investments, which MAN said could help manufacturers expand output and improve efficiency.

From Inflation Management to Production Growth

While acknowledging the modest decline in August inflation, MAN stressed that sustainable economic growth would require more than a gradual reduction in the headline inflation rate.

The association said Nigeria needs an operating environment in which manufacturers can access affordable energy, finance, foreign exchange and efficient logistics, while also increasing the local sourcing of raw materials and other production inputs.

MAN therefore urged the Federal Government to use the current period of relative inflation moderation to implement targeted cost-reduction and productivity-enhancing measures.

The association said such measures would help create the conditions for manufacturers to produce more at lower cost, attract investment, expand employment and strengthen the competitiveness of Nigerian-made goods.

For MAN, the ultimate test of economic policy should not only be whether inflation is falling, but whether Nigerian businesses are increasingly able to produce competitively, invest sustainably and create jobs.