Rising energy costs: a bane to Nigeria's manufacturing sector transformation

Abstract

The manufacturing sector is indispensable for realising Nigeria's age-long economic transformation quest. However, the rising cost of energy, a critical input factor, continues to raise production costs and undermine the manufacturing sector's competitiveness. This paper explores Vietnam's manufacturing success to draw lessons Nigeria can leverage to become a manufacturing powerhouse in Africa and the world. The paper discusses five episodes in the relationship between energy costs and manufacturing sector growth between 2015Q2 and 2024Q1, with the general conclusion that rising energy costs inhibit manufacturing sector growth in Nigeria. Taking cues from Vietnam, Nigeria should formulate a comprehensive national strategy to reduce energy costs, diversify its energy mix towards renewable energy, and leverage public-private partnerships to mobilise the necessary funding for energy infrastructure projects.