By Victor Ahiuma-Young
The growing cost of keeping factories operational in Nigeria is emerging as a major threat to industrial stability and employment, as employers struggle with rising electricity bills, multiple tax obligations, high borrowing costs and the uncertainties surrounding access to foreign exchange and essential production inputs.
For employers in the chemical and non-metallic products industries, the challenge extends beyond declining profit margins.
The mounting cost of production is making business expansion, equipment modernisation and sustained investment increasingly difficult, raising concerns about the long-term capacity of companies to maintain existing operations and protect jobs.
The situation has brought the question of job security into sharper focus, with manufacturers facing the difficult task of balancing rising operational expenses against the need to sustain production, meet financial obligations and maintain their workforce.
The Chemical and Non-Metallic Products Employers Federation, CANMPEF, in its Secretariat’s report by the Executive Secretary, Olorunfemi Oke at the 46th Annual General Meeting, AGM, in Lagos,
identified high electricity costs, unreliable power supply, multiple taxation, expensive industrial finance and foreign-exchange difficulties as some of the major pressures confronting its members.
The report painted a challenging picture of the operating environment for manufacturers, warning that the combination of these factors continued to affect production costs, operational efficiency, investment decisions and the competitiveness of locally manufactured products.
On electricity, the Federation noted that the high cost of power and concerns about the reliability of supply had continued to place considerable pressure on manufacturing operations
For energy-intensive industries, including chemical processing and the production of non-metallic products, electricity remains a critical production input that directly influences operational expenses, output and product pricing.
The report observed that unreliable public electricity supply had increased manufacturers’ dependence on alternative power sources, adding another layer of financial pressure on businesses.
It stated that the situation had disrupted production planning and increased operating expenses, with consequences for the competitiveness of locally manufactured goods.
“Members reported that the high cost of electricity and concerns about the reliability of supply continued to place considerable pressure on manufacturing operations,” the report stated.
The Federation further expressed concern about the need for more predictable electricity tariffs, improved service delivery and greater transparency in the relationship between electricity charges and the quality of supply received.
Beyond electricity, multiple taxation and complicated tax administration were identified as additional obstacles confronting employers.
According to the report, manufacturers had to contend with multiple tax requirements, overlapping levies and compliance procedures across different levels of government.
The Federation warned that such complexities increased the cost of doing business and diverted resources that could otherwise have been invested in productive activities, factory expansion and workforce development.
It called for better coordination among tax authorities, clearer guidance on applicable obligations and more consistent and transparent administration of tax rules.
The cost of accessing finance has also become a major concern for employers seeking to sustain operations and protect their investments.
CANMPEF observed that the prevailing high-interest-rate environment had increased borrowing costs, making it more difficult for manufacturers to secure working capital, purchase equipment, modernise production facilities and invest in energy-efficient technologies.
The challenge, it noted, was particularly significant for businesses requiring substantial upfront expenditure on machinery, imported raw materials, inventory and compliance with technical standards.
For companies operating under these conditions, the ability to maintain production capacity and undertake fresh investments increasingly depends on access to affordable and predictable financing.
Foreign-exchange conditions have further complicated the situation
The report explained that manufacturers continued to face difficulties accessing foreign currency for the importation of raw materials, machinery, spare parts and specialised production inputs that were either unavailable locally or unsuitable for their technical requirements.
It added that exchange-rate movements and uncertainties surrounding foreign-exchange access complicated budgeting and procurement decisions.
Delays in import documentation, customs clearance and other regulatory procedures also increased transaction costs, extended production lead times and threatened the smooth running of manufacturing schedules.
The combined effect of these challenges has placed industrial employers under considerable pressure, particularly as they seek to remain competitive in a market where production costs continue to influence pricing and investment decisions.
Although the report did not disclose specific figures on job losses or retrenchments among member companies, the pressures identified raise concerns about the sustainability of industrial operations and the capacity of employers to maintain and expand employment.
The Federation’s report also highlighted the importance of local sourcing as a strategy for reducing foreign-exchange exposure and strengthening domestic industrial linkages. However, manufacturers continue to encounter limitations in the availability, consistency and quality of locally produced raw materials and intermediate goods. Inadequate transportation and logistics networks, unreliable electricity and limited supporting industrial facilities have further complicated efforts to strengthen domestic supply chains.
The situation presents a difficult operating environment for employers who must contend with rising input costs while maintaining production standards, meeting market demands and fulfilling their obligations to workers.
Against this background, CANMPEF has outlined a series of advocacy priorities for 2026 aimed at addressing some of the major obstacles confronting manufacturers.
The Federation plans to engage the Nigerian Electricity Regulatory Commission (NERC), electricity distribution companies and relevant authorities on the cost and reliability of electricity supply.
It also intends to pursue greater clarity and coordination in tax administration to reduce uncertainty and prevent duplicative charges on businesses.
On industrial relations, CANMPEF reported that it successfully concluded a two-year industry wage agreement with the National Union of Chemical, Footwear, Rubber, Leather and Non-Metallic Products Employees in 2025.
The agreement, which took effect on April 1, 2025, and runs until March 31, 2027, provides a total monthly salary package of N114,500, comprising N46,800 basic salary, N32,200 housing allowance and N35,500 transport allowance.
The agreement represents an important aspect of the Federation’s efforts to maintain constructive industrial relations and provide an agreed framework for workers’ remuneration during a challenging economic period.
The report also disclosed that the Federation continued to support members on collective bargaining, labour-law compliance, minimum-wage implementation and dispute resolution.
It further organised training programmes covering leadership, regulatory compliance, productivity improvement, occupational health and safety, chemical handling, process safety and environmental compliance.
For employers, the challenge is not merely how to remain profitable but how to keep factories running in an environment where the cost of electricity, finance, taxation, imported inputs and logistics continues to weigh heavily on operations.
For workers, the sustainability of their jobs is closely connected to the ability of their employers to maintain viable businesses, invest in production and compete effectively.
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