Costs of goods set to rise as manufacturers face higher energy, input costs
By: Abudu Olalekan
If you haven’t noticed prices going up yet. You will.
Another wave of price increases is coming, and this one is going to hit almost every single thing you buy.
Manufacturers across the country are currently bracing for the biggest jump in production costs we have seen in 18 months, driven almost entirely by soaring energy prices and input costs. And almost all of it is going to be passed straight to consumers.
This is on top of the pressure the sector was already under. A review of the latest annual reports shows the 17 largest listed manufacturers on the NGX recorded a combined ₦7.59 trillion in input costs for 2025. That is a 15.2% increase on the year before.
And that number is already out of date.
Analysts describe this as a perfect double whammy. Rising costs on one side. Collapsing consumer purchasing power on the other. And the trigger for all of this is half way across the world, in the tensions playing out between the US, Iran and Israel.
The thing almost no one is talking about enough is diesel. Almost no factory in Nigeria runs on the national grid. Diesel is the real power grid of this country. And right now the entire global supply is at risk because of what is happening in the Strait of Hormuz. 20% of all the world’s oil passes through that narrow stretch of water. If it closes, analysts are saying crude could hit $150 a barrel.
We are already seeing the impact here. As of this week, depot price of diesel is sitting at around ₦1,700 per litre across almost all major hubs. That is a ₦300 jump in less than three weeks.
For any factory running 24 hours a day on genera$tors, that is an extinction level cost increase.
George Onafowokan, MD of Coleman Technical Industries put it pretty bluntly when he spoke to Reportersroom this week. “There is not a single factory built in Nigeria that does not budget first for generators. Manufacturers are not manufacturers first any more. We are all power generation companies first.”
He said energy now makes up the single largest part of production costs for almost every company in the country.
Across every industrial cluster right now, factories have teams working 24/7 just to manage fuel. Their entire operation now revolves around keeping generators running, and keeping diesel stocked.
The hardest hit are the energy intensive sectors. Cement, brewing, packaging, food processing. Industry estimates put the combined annual energy bill for the big three cement manufacturers alone at over ₦1.1 trillion.
BUA is the most exposed right now, energy makes up 42% of their entire cost of goods sold. Dangote is not much better at roughly 40%. Only Lafarge has been moving fast on alternatives, rolling out waste to energy and CNG to try and get off diesel.
In the brewing sector we already saw the first move this week. Nigerian Breweries announced they are increasing the price of all their products effective March 20. Star, Gulder, Legend, Maltina, Heineken. All of them are going up. It will not be the last.
There is a very cruel irony here. Higher global oil prices will be great for government revenue. It will boost foreign exchange reserves. But for every single other person and business in Nigeria, it is effectively a massive implicit tax on everything.
It is not just factories either. Higher diesel prices will flow through to every single part of the supply chain. Transport, logistics, distribution. Every single step gets more expensive.
And all of this is happening at a time when most people already cannot afford to buy anything else. Analysts are warning that we are about to hit a very nasty breaking point. Companies will raise prices, sales will collapse, and then we will see factories start cutting shifts and laying off staff in the second half of this year.
Data from the NBS already shows manufacturing’s share of GDP fell to 8.05% in 2025, down from 8.24% the year before. The NESG’s latest business confidence monitor is the lowest it has been in three years.
No one really knows what happens next. The entire situation is completely dependent on events on the other side of the world. If tensions in the Middle East get worse, prices go even higher. If they ease, we might get a small reprieve.
But right now all signs are pointing one way. Stakeholders say unless there is some kind of urgent and unexpected policy intervention from the government, the manufacturing sector is going to come under far more strain this year, even as the government makes record revenues from the exact same high oil prices that are destroying them.
