The Manufacturers Association of Nigeria (MAN) has identified the country’s inadequate electricity supply as a major obstacle to the profitability of manufacturers, resulting in an estimated annual economic loss of approximately N10.1tn. This loss represents about two percent of Nigeria’s Gross Domestic Product (GDP).
MAN emphasized that this unfavorable situation has positioned Nigeria among the most challenging countries to conduct business, ranking at 171 out of 190 countries. The association issued a statement in response to President Bola Tinubu’s approval of the Electricity Bill.
According to MAN, the current power supply falls short of meeting the energy requirements of both the manufacturing sector and the entire population. However, the association expressed optimism that the implementation of the Electricity Act 2023 could significantly transform the manufacturing sector.
The statement released by MAN stated, “As an advocacy Association, MAN has always advocated for the need for a cost-reflective electricity tariff to prevent the extortion of our members. Fortunately, we are delighted that this new Act aligns perfectly with our objectives, as it will facilitate the realization of a cost-reflective tariff by fostering healthy price competition between states and private investors.”
The country’s erratic power supply has been one of the primary reasons for the relocation of some manufacturing companies. MAN believes that if the new Act effectively addresses the challenges in the power sector, it will likely encourage an inflow of foreign direct investment (FDI) in manufacturing, boost the sector’s performance, and increase its contribution to the national economy.
MAN also expressed optimism that if utilized appropriately, the substantial revenue generated from a robust manufacturing sector could help address the infrastructure deficits in various states without imposing additional tax burdens on manufacturers.
The association’s statement highlights the urgent need for comprehensive measures to address Nigeria’s electricity shortage and its adverse impact on the manufacturing sector. Addressing this critical issue would not only enhance the profitability of manufacturers but also contribute to overall economic growth and attract more investment in the country.
Efforts to improve the power sector must be accompanied by strategic planning, investment in infrastructure, and transparent policies that promote a sustainable and reliable electricity supply. By addressing this crucial challenge, Nigeria can enhance its business environment, attract more investments, and foster economic prosperity for its citizens.
