Nigerian manufacturers have pointed to the steep cost of diesel as a primary factor driving up the prices of goods across the country. Segun Ajayi-Kadir, the Director General of the Manufacturers Association of Nigeria, emphasized that diesel consumption eats up a staggering 80 percent of manufacturers’ profits in Nigeria. He underscored that the high cost of production is directly contributing to the surge in prices nationwide.
Ajayi-Kadir stressed that local manufacturers shouldn’t bear the blame for raising prices, as they are grappling with challenging conditions. He highlighted the exorbitant price of diesel, which stands at about N1,700 per litre, making energy production financially burdensome for manufacturers.
Given these astronomical costs, it’s inevitable for manufacturers to adjust their product prices to maintain profitability.
Furthermore, Ajayi-Kadir pointed out various other challenges exacerbating the situation, including the new customs exchange rate, increased interest rates, foreign exchange scarcity, and regulatory hurdles such as NAFDAC bans. These factors collectively intensify the pressures on manufacturers, making it increasingly difficult to sustain operations while turning a profit.
However, Ajayi-Kadir expressed relief at the recent reduction in diesel prices following the introduction of diesel sales by the Dangote refinery.
Aliko Dangote, the refinery’s owner, announced that the entry of its product into the market has driven prices down from N1,700 per litre to N1,200, offering some respite to manufacturers.
Despite this, the inflation rate continues to soar, reaching 33.20 percent in March, up from 31.70 percent in February. This persistent upward trend underscores the urgency of addressing the underlying factors driving up production costs and inflation in Nigeria.
