Nigerian Manufacturers Spend N1.35tn on Alternative Power as Energy Crisis Deepens
Nigerian manufacturers spent an estimated N1.35 trillion on alternative electricity sources in 2025, representing a 23% increase from the N1.1 trillion spent in 2024.
The Manufacturers Association of Nigeria disclosed the figure as manufacturers continue to rely heavily on generators and other alternative sources to keep their factories operating amid unreliable grid electricity and rising energy costs.
MAN President Francis Meshioye disclosed the figure during the opening of the association’s 54th Annual General Meeting and Made-in-Nigeria Exhibition in Lagos.
The latest expenditure means manufacturers spent approximately N250 billion more on alternative power in 2025 than in the previous year.
The increase occurred despite factory closures and production cuts, highlighting the growing financial burden associated with keeping manufacturing operations running.
Manufacturers have increasingly relied on diesel, gas and other alternative sources because grid electricity has not consistently provided sufficient power for industrial production.
The result is that energy expenditure now represents a major component of production costs.
The problem extends beyond the direct cost of fuel.
Manufacturers must also finance generators, maintenance, replacement parts, power infrastructure and additional logistics associated with operating outside the national grid.
These costs ultimately feed into the prices of locally produced goods.
MAN warned that the rising cost of self-generation was becoming increasingly difficult for manufacturers to absorb and could undermine the survival and expansion of businesses.
The association said manufacturers are simultaneously dealing with high energy costs, foreign-exchange pressures, expensive financing, logistics costs, regulatory charges and weak consumer purchasing power.
The energy burden is particularly important because Nigeria’s manufacturing sector is expected to play a central role in the government’s drive to increase domestic production and reduce import dependence.
However, the latest data shows that local manufacturers are still operating at a significant cost disadvantage.
A separate manufacturing report released around the same time found that imports account for approximately 64% of Nigeria’s manufactured-goods market, representing an estimated $29.4 billion market opportunity captured by imported products in 2025.
The report also found that manufacturing output increased by only 1.4% in 2025, although growth accelerated to 3.3% during the first half of 2026.
The improvement therefore remains concentrated.
Almost 90% of the 3.3% manufacturing expansion recorded in the first half of 2026 came from cement and food processing, according to the report.
Manufacturing’s contribution to GDP has also declined, falling from 8.42% in 2023 to 8.05% in 2025, well below the 15% target set under Nigeria’s Industrial Policy 2030.
The figures suggest that the sector is growing, but not yet at the breadth or speed required to fundamentally transform the structure of the Nigerian economy.
Energy remains one of the biggest obstacles.
When manufacturers spend more money generating electricity, less capital remains available for expanding production lines, purchasing machinery, developing new products, hiring workers and investing in technology.
The association has consequently continued to call for reforms that would make electricity supply more reliable and reduce the cost of industrial production.
The government has introduced several reforms in the electricity sector, including tariff adjustments and efforts to increase private-sector participation.
But the manufacturing sector’s continued reliance on alternative power indicates that the benefits of those reforms have yet to fully reach factories.
For Nigeria to reduce its dependence on imported manufactured products, local producers will need to become more competitive.
That requires cheaper and more reliable electricity, easier access to long-term financing, stable FX availability, better transport infrastructure and stronger domestic supply chains.
Until those conditions improve, manufacturers are likely to continue spending a significant portion of their resources simply keeping their factories powered.
