Despite Nigeria’s inflation rate recording another slight decline in August, manufacturers have warned that the easing figures have yet to bring any real relief to businesses struggling with soaring production costs.

The Manufacturers Association of Nigeria (MAN) says factories across the country are still battling rising expenses linked to energy, transportation, financing, foreign exchange and raw materials, leaving many businesses under severe operational pressure.

Reacting to the latest inflation data released by the National Bureau of Statistics (NBS), MAN Director-General, Segun Ajayi-Kadir, said the marginal drop in inflation was encouraging but insufficient to address the deeper challenges facing the manufacturing sector.

According to the NBS, Nigeria’s headline inflation rate fell to 15.39 per cent in August from 15.43 per cent recorded in July, representing a decline of 0.04 percentage points.

Ajayi-Kadir described the development as a positive signal for the economy but cautioned that the improvement remained too small to significantly impact the cost of doing business.

He noted that while headline inflation appears to be slowing, manufacturers are more concerned about whether the actual cost of producing goods is falling.

“Manufacturers continue to face intense pressure from high energy bills, logistics costs, exchange-rate-related expenses, expensive raw materials and multiple regulatory and fiscal charges,” he said.

According to him, these persistent cost burdens continue to affect production levels, product pricing, investment plans and job creation within the sector.

Ajayi-Kadir explained that many manufacturers are unable to transfer the full cost of production increases to consumers because of weak purchasing power among Nigerians.

As a result, he said, companies are seeing their profit margins squeezed while requiring larger amounts of working capital to sustain operations.

“When the cost of inputs rises, businesses need more money just to purchase the same volume of materials,” he noted.

The MAN chief further warned that elevated energy, financing and logistics expenses are forcing companies to adopt a cautious approach to expansion and investment.

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He said the situation could limit capacity utilisation, as some manufacturers may be compelled to cut production when operating costs become unsustainable.

According to him, running additional shifts, expanding production lines or purchasing more inputs becomes increasingly difficult when expenses continue to outpace returns.

To reverse the trend, Ajayi-Kadir urged the Federal Government to take advantage of the current moderation in inflation by implementing policies aimed at lowering production costs and boosting industrial productivity.

Among the measures proposed by MAN are improved access to affordable and reliable electricity for industrial clusters, priority gas supply for manufacturers and incentives to encourage investment in renewable energy and captive power solutions.

He also called for urgent rehabilitation of major transport routes connecting ports, industrial hubs, farming communities and key markets, arguing that poor transportation infrastructure remains a significant contributor to business costs.

Ajayi-Kadir noted that transport alone accounted for 1.64 per cent of inflation and stressed the need to eliminate unnecessary road charges and multiple transport-related levies imposed on businesses.

The association further urged authorities to ensure that recently introduced tax reforms are implemented in a manner that promotes fairness and transparency without creating additional burdens for local manufacturers.

MAN also renewed its call for full implementation of the Nigeria First Policy, urging government agencies to prioritise locally manufactured products in public procurement.

In addition, the association advocated the creation of a dedicated long-term financing window for manufacturers at below-market interest rates to support working capital needs, machinery acquisition and productivity-enhancing investments, especially for small and medium-scale manufacturers.

Ajayi-Kadir maintained that while lower inflation figures are welcome, meaningful economic recovery for manufacturers will depend on policies that directly reduce the cost of production and strengthen the competitiveness of locally produced goods.