Manufacturing in Nigeria, Africa at Risk as Global Tensions Bite – PAMA Chief Warns

The Secretary-General of the Pan-African Manufacturers Association (PAMA), Segun Ajayi-Kadir, has raised the alarm over the future of manufacturing in Nigeria and across Africa. He says escalating global tensions are disrupting production and pushing up costs.

Ajayi-Kadir had hoped the second quarter of the year would bring some relief and recovery. But the current reality, he admits, falls far short of expectations.

Across the continent, manufacturers are caught in a perfect storm. Persistent supply chain disruptions, high borrowing costs, volatile exchange rates and weak consumer demand are forcing tough decisions. Companies must choose between absorbing the shocks or building new systems to bypass them.

“The operating environment offers little comfort,” Ajayi-Kadir said. “Global manufacturing activity remains subdued. Purchasing managers’ indices are hovering around the 50-point mark that separates expansion from contraction. The World Trade Organisation projects global trade growth of just 1.9 per cent for the year, weighed down by energy price uncertainty and geopolitical tensions.”

Against this backdrop, African manufacturers face their own domestic challenges. West Africa, according to Ajayi-Kadir, is the most acutely pressured subregion. The decline in inflation in Nigeria and Ghana masks the structural persistence of high costs on factory floors.

Currency depreciation across markets has driven up the cost of imported raw materials, machinery and capital goods. This burden falls hardest on manufacturers with deep import dependence and limited access to foreign exchange.

“High interest rates are compounding the challenge,” he said. “Kenya held rates broadly within the 8.75 to nine per cent range through Q1. Egypt implemented a modest reduction from 20 to 19 per cent. Despite these adjustments, borrowing costs across the continent remain elevated. This constrains access to credit and curtails the capital investment that growth in manufacturing output would ordinarily require.”

For small and medium-scale manufacturers, the squeeze is severe. The African Development Bank projects Africa’s GDP growth at approximately 4.3 per cent in 2026, driven primarily by domestic demand and regional economic activity.

East Africa, he noted, has offered pockets of relative stability. Kenya and Ethiopia are containing inflation within ranges that offer some predictability for planning. But logistics and energy supply inefficiencies continue to erode productivity.

The strategic question facing manufacturers is how to translate uneven conditions into a coherent growth posture. Ajayi-Kadir pointed to five interconnected imperatives.

First, companies must move from reactive cost-cutting to institutionalised cost intelligence. This means using real-time data to track input price movements, optimise procurement timing and reduce production waste. Sourcing strategies should also shift to favour local and regional alternatives where feasible.

Second, manufacturers need to extract more from existing capacity through lean manufacturing principles. Reducing downtime, improving machine utilisation and deploying digital tools that identify bottlenecks before they become production losses are key.

Third, the demand side must be addressed. With consumer purchasing power still weak across many African markets, manufacturers should adopt more segmented and adaptive market strategies. Offering product resizing and price-point innovation can help maintain volume among cost-sensitive buyers. Diversifying product lines to serve multiple income segments is also critical. Strengthening last-mile distribution networks and forging partnerships with digital platforms are now core to commercial survival.

Fourth, export and regional market development should become a focus. The African Continental Free Trade Area (AfCFTA) offers a live opportunity for manufacturers to expand beyond domestic markets. But this requires investment in product standards, certification, compliance with rules of origin and cross-border logistics. Export, analysts argue, must cease to be an afterthought and become a strategic anchor.

Underpinning all of this is the fifth imperative: financial and operational resilience. Working capital discipline, diversification of revenue streams, cautious debt exposure and the flexibility to adjust production volumes or redirect supply chains are now baseline expectations. Manufacturers that intend to weather what may be a prolonged period of macroeconomic volatility must adopt these measures.

“Q1 has delivered a transition phase,” Ajayi-Kadir said. “For African manufacturers, the verdict is clear: the companies that move earliest and most deliberately from passive endurance to active strategy will be the ones that emerge from this period with market share, margin and competitive distance from rivals still waiting for conditions to improve.”