Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria (MAN) and Secretary-General of the Pan-African Manufacturers Association (PAMA), has expressed deep concern over the future of manufacturing in Nigeria and across Africa. He highlighted that escalating global tensions are causing significant disruptions to production and driving up costs.
Challenges Facing African Manufacturers
Ajayi-Kadir noted that while he had hoped the second quarter of 2026 would bring recovery, the current reality falls short of expectations. Across the continent, persistent supply chain disruptions, high borrowing costs, volatile exchange rates, and weak consumer demand are forcing manufacturers to decide whether to continue absorbing shocks or to build new systems to circumvent them.
“The operating environment offers little comfort. Global manufacturing activity remains subdued, with purchasing managers’ indices hovering around the 50-point threshold that separates expansion from contraction. The World Trade Organisation (WTO) projects global trade growth of just 1.9 per cent for the year, weighed down by energy price uncertainty and geopolitical tensions,” he said.
Regional Pressures and Domestic Challenges
West Africa remains the most acutely pressured subregion. Although inflation has declined in Nigeria and Ghana, the structural persistence of high factory-floor costs is masked. Currency depreciation across markets has driven up the cost of imported raw materials, machinery, and capital goods, a burden that falls hardest on manufacturers with deep import dependence and limited foreign exchange access.
“High interest rates are compounding the challenge. Kenya held rates broadly within the 8.75 to nine per cent range through Q1, while Egypt implemented a modest reduction from 20 to 19 per cent. Despite these adjustments, borrowing costs across the continent remain elevated, constraining access to credit and curtailing capital investment needed for manufacturing growth,” Ajayi-Kadir explained.
Impact on Small and Medium-Scale Manufacturers
For small and medium-scale manufacturers, the squeeze is severe. The African Development Bank (AfDB) projects Africa’s GDP growth at approximately 4.3 per cent in 2026, driven primarily by domestic demand and regional economic activity. East Africa offers pockets of relative stability, with Kenya and Ethiopia containing inflation within ranges that offer some predictability for planning, even if logistics and energy supply inefficiencies continue to erode productivity.
Strategic Imperatives for Survival
Ajayi-Kadir outlined five interconnected imperatives for manufacturers to navigate the current challenges. First, moving from reactive cost-cutting to institutionalised cost intelligence, using real-time data to track input price movements, optimise procurement timing, and reduce production waste, while restructuring sourcing strategies to favour local and regional alternatives where feasible.
Second, extracting 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.
Third, addressing the demand side by adopting more segmented and adaptive market strategies, offering product resizing and price-point innovation to maintain volume among cost-sensitive buyers, while diversifying product lines to serve multiple income segments. Strengthening last-mile distribution networks and forging partnerships with digital platforms are increasingly viewed as core to commercial survival.
Fourth, focusing on export and regional market development. The African Continental Free Trade Area (AfCFTA) presents a live opportunity for manufacturers to expand beyond domestic markets under pressure, but only for those willing to invest in product standards, certification, compliance with rules of origin, and cross-border logistics. Export must cease to be an afterthought and become a strategic anchor.
Fifth, building financial and operational resilience. Working capital discipline, diversification of revenue streams, cautious debt exposure, and flexibility to adjust production volumes or redirect supply chains are now baseline expectations for manufacturers that intend to weather prolonged macroeconomic volatility.
“Q1 has delivered a transition phase, and 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,” he concluded.
