POSITION OF THE MANUFACTURERS ASSOCIATION OF NIGERIA ON AUGUST 2026 INFLATION INTRODUCTION

The Manufacturers Association of Nigeria (MAN) acknowledges the further moderation in Nigeria’s headline inflation rate to 15.39% in August 2026, from 15.43% in July 2026. This represents a marginal decline of 0.04 percentage points and continues the recent downward movement in headline inflation. MAN considers the moderation a positive development, particularly as price stability is important for business planning, investment and consumer welfare. However, the very small reduction in the headline rate indicates that the improvement remains fragile.

More importantly, a lower inflation rate does not necessarily mean that manufacturers are experiencing lower production costs. For manufacturers, the critical issue is whether the cost of producing goods is declining.

Manufacturers continue to operate in an environment characterised by high energy costs, logistics challenges, exchange rate costs, elevated raw-material prices and multiple fiscal and regulatory charges. MAN therefore views the August inflation outcome as an opportunity to move from simply managing inflation to addressing the structural costs that keep Nigerian manufacturing expensive.The August inflation outcome has several implications for manufacturers.

Manufacturers cannot always transfer the full increase in production costs to consumers because purchasing power remains weak; therefore, margins remain under pressure while working capital requirements remain high. When input prices rise, manufacturers require more funds to purchase the same quantity of materials. Investment decisions remain cautious as high energy, financing and logistics costs continue to reduce the attractiveness of new investments. Capacity utilisation may remain constrained. Some firms may reduce production when the cost of operating additional shifts or purchasing additional inputs becomes commercially unsustainable. Local products may become less competitive. High domestic production costs make it more difficult for Nigerian manufacturers to compete with imported products, particularly where imported goods enter the market at lower costs. Employment growth may be affected as sustained cost pressures can limit manufacturers’ ability to expand production and create additional jobs.

The August inflation figures provide a modest positive signal for the Nigerian economy. Nevertheless, sustainable economic growth requires more than a gradual decline in the headline inflation rate. Nigeria needs an environment in which manufacturers can access affordable energy, finance, foreign exchange and logistics, while sourcing a greater proportion of their inputs locally.

MAN therefore calls on the Federal Government to use the current period of relative inflation moderation to implement targeted cost-reduction and productivity-enhancing measures with the aim to build a manufacturing sector that can produce more, at lower cost, with greater investment, higher employment and stronger competitiveness.

In conclusion, MAN recommends the following policy measures for the government’s consideration to support sustainable economic growth.

Government should adopt policy measures to aid the reduction of energy cost of industrial production. This should include dedicated and reliable electricity supply to major industrial clusters, priority access to gas for industrial users, incentives for manufacturers investing in efficient captive power and renewable-energy systems and review of electricity tariff structures affecting productive industries. The objective should be measured by reducing the cost of energy required to produce a unit of manufactured output, rather than merely increasing electricity generation.

Given that transport contributed 1.64 percentage points to inflation, government should identify the major transport corridors linking ports, industrial clusters, agricultural production zones and major markets and prioritise them for rehabilitation and maintenance. The Federal Government should also work with state governments to eliminate unnecessary road charges and overlapping transport-related levies.

Implement the relevant provisions of the new tax laws to promote equity, fairness and transparency; eliminate multiple taxation; remove overlapping levies; and ensure that new tax reforms do not impose fiscal burdens on local production. The Nigeria First Policy should be effectively implemented to promote the procurement and consumption of locally manufactured goods, particularly in government procurement.Introduce a targeted long-term manufacturing financing window at a below-market rate for working capital, machinery and productivity-enhancing investment, particularly for MSME manufacturers.