Nigerian Manufacturers Battle Power Crisis, High Costs as Sector Growth Slows — NESG

Nigeria’s manufacturing sector is facing renewed operational pressure as persistent electricity shortages, rising production costs and limited access to financing continue to constrain business performance.

This is according to the October 2026 Business Confidence Monitor (BCM) published by the Nigerian Economic Summit Group (NESG), which revealed that manufacturing activities slowed during the month despite the sector remaining within expansion territory.

The report showed that the sector’s Current Business Performance Index fell to 107.3 points in October, compared with 108.4 points in September and 111.3 points in the corresponding period of 2025.

NESG attributed the slowdown to several structural and operational challenges, including unreliable electricity supply, inadequate raw materials, high rental expenses, restricted access to credit and infrastructure deficiencies.

The report noted that these difficulties continued to drive up the cost of doing business, placing additional financial pressure on manufacturers.

Among the subsectors, Textile, Apparel and Footwear recorded the sharpest decline, with its performance index falling from 127.5 points in September to 99.7 points in October, moving the subsector into contraction.

Cement manufacturing also remained below the expansion threshold, posting 94.5 points.

Food, Beverage and Tobacco, however, recorded an improvement in performance and remained the only one of the three major manufacturing subsectors to sustain expansion.

The latest findings reinforce concerns about the impact of Nigeria’s electricity challenges on industrial productivity.

Manufacturing companies require reliable electricity to operate machinery, process raw materials and maintain uninterrupted production. However, frequent outages have compelled many businesses to rely on alternative power sources, further increasing operating expenses and weakening their competitiveness.

Economy-wide business performance loses momentum

The moderation in manufacturing activity mirrored the broader performance of the Nigerian economy during October.

According to NESG, the overall Current Business Performance Index declined to 115.4 points from 117.8 points in September, although it remained higher than the 111.3 points recorded in October 2025.

All sectors remained in expansion territory, but the performance was uneven.

Trade and Services were the only sectors to record improvements compared with the preceding month, while Agriculture, Manufacturing and Non-Manufacturing experienced slower business growth.

The report also highlighted the continued pressure of rising operating expenses on businesses.

The cost of doing business sub-index stood at 45.2 points, while the prices sub-index recorded 65.5 points during the month.

With both indicators significantly below the 100-point neutral benchmark, the figures reflected persistent cost pressures confronting businesses and elevated producer prices.

Year-end demand raises business expectations

Notwithstanding the slowdown in current business activities, Nigerian businesses expressed stronger optimism about the immediate economic outlook.

NESG’s Future Business Expectations Index rose to 130.8 points in October from 128.9 points in September, suggesting improved confidence in business conditions over the next one to three months.

Manufacturing recorded an expectations index of 145.1 points, outperforming Non-Manufacturing at 135 points but trailing Trade, which led with 194 points.

The report linked the improved outlook largely to expectations of increased consumer spending during the year-end festive period, alongside higher economic activity associated with ongoing campaign activities.

The improved expectations suggest that businesses are anticipating stronger demand in the coming months, even as manufacturers continue to contend with electricity supply challenges, rising input costs and financing constraints.

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