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Top 5 Challenges Facing Nigeria’s Manufacturing Sector in 2025

By  Milcah  Tanimu

The Nigerian manufacturing sector is struggling due to high interest rates, persistent inflation, and other significant challenges. According to PwC’s 2025 Budget and Economic Outlook report, these issues are weakening productivity in the real sector.

  1. High Interest Rates and Inflation
    Interest rates, currently at 27.25%, continue to hurt businesses, especially MSMEs. The inflationary pressures affect consumer purchasing power, reducing demand for non-essential goods.
  2. Foreign Exchange and Energy Costs
    Foreign exchange volatility and high energy costs remain significant barriers. These factors drive up production and operational expenses in the manufacturing sector.
  3. Funding Gap for MSMEs
    Nigeria’s MSMEs face a $32.2 billion financing gap. With limited access to credit, businesses struggle to meet funding requirements, hindering growth and innovation.
  4. Regulatory Landscape Challenges
    Despite some positive changes, such as duty waivers and recapitalization, businesses still face regulatory complexities that increase costs and hinder operations.
  5. Inadequate Infrastructure
    The country’s road and energy infrastructure remain underdeveloped. Approximately 135,000km of roads remain untarred, and energy inefficiencies add to logistics and production costs.

Addressing these challenges requires coordinated efforts to stabilize the economy and improve Nigeria’s business environment.

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