40% of Nigerian breadmakers shut down in two years as energy costs bite

About 40 per cent of members of the Premium Breadmakers Association of Nigeria (PBAN) have closed their businesses in the past two years, the association said, citing high energy costs, expensive loans and worsening economic conditions.

PBAN called on the Federal Government to introduce grants and single-digit interest loans to help real sector businesses survive mounting operational costs. Its president, Engr Emmanuel Onuorah, disclosed this at the association’s fourth Day-Out Exhibition and Masterclass in Lagos.

Energy is killing bakeries

Speaking on the theme “Baking Through the Economic Storm: Innovation, Efficiency and Growth for a Sustainable Industry”, Onuorah said many bakery operators could no longer cope with rising production expenses.

“Within the last two years, we've lost about 40 per cent of our members. The energy is killing us,” he said.

He warned that continued closures could threaten jobs and disrupt Nigeria’s food supply chain, given the industry’s role in food production and distribution.

Onuorah criticised Nigeria’s high cost of borrowing, saying businesses cannot survive with interest rates above 30 per cent. He also raised concerns about access to government-backed intervention funds, alleging that politically connected individuals were more likely to benefit.

Despite PBAN’s efforts to secure financing for members, he said none had successfully obtained a loan from the Bank of Industry.

CNG switch remains costly

Onuorah said switching to alternative energy sources, including compressed natural gas (CNG), remains financially difficult. He estimated that a small bakery would need between N40 million and N50 million to install a hybrid energy system capable of using diesel and CNG.

He urged the government to provide seed funding and grants while working with commercial banks to make affordable loans available to bakery operators.

Borrowing costs squeeze margins

PBAN Financial Secretary and Chairperson of the 2026 Day-Out Planning Committee, Adijat Olaniyi-Olopade, said the high cost of borrowing had made profitability increasingly difficult. She explained that businesses borrowed at an average interest rate of 33 per cent, while profit margins from bread sales remained below 30 per cent.

Olaniyi-Olopade identified electricity and fuel as major contributors to production costs, accounting for about 50 per cent of bakery operating expenses. She said her bakery’s monthly diesel expenditure had risen from N9 million to N19 million, despite its inability to increase bread prices.

The situation, she said, had forced several operators to shut down and sell their equipment.

The closures threaten jobs and Nigeria’s food supply chain, PBAN warned. For bakery owners, the immediate ask is cheaper energy finance, grants and single-digit loans.