Nigerian Breadmakers Cry Out as High Interest Rates, Energy Costs Force Businesses to Shut Down
- Breadmakers say about 40% of their members have closed their businesses in the past two years due to high energy costs and expensive loans
- The association is urging the Federal Government to provide grants and single-digit interest loans to help struggling bakeries survive
- PBAN says energy accounts for about 50% of bakery production costs, with rising diesel expenses forcing more businesses to shut down
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Legit.ng journalist Victor Enengedi has over a decade's experience covering energy, MSMEs, technology, banking and the economy.
The Premium Breadmakers Association of Nigeria (PBAN) has disclosed that about 40 per cent of its members have shut down operations in the past two years due to rising energy costs, expensive loans and worsening economic conditions.
The association called on the Federal Government to introduce grants and single-digit interest loans to help businesses in the real sector overcome mounting operational challenges.
Source: UGC
PBAN President, Engr Emmanuel Onuorah, disclosed this during the association’s fourth Day-Out Exhibition and Masterclass in Lagos.
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 increasing production expenses.
He warned that continued business closures could threaten jobs and disrupt Nigeria’s food supply chain, given the industry's contribution to food production and distribution.
“Within the last two years, we've lost about 40 per cent of our members. The energy is killing us,” he said.
Bakeries struggle with expensive loans, energy costs
Onuorah criticised the high cost of borrowing in Nigeria, arguing that businesses could not survive with interest rates exceeding 30%.
He also expressed concerns about the accessibility of government-backed intervention funds, alleging that politically connected individuals were more likely to benefit from such facilities.
According to him, despite PBAN's efforts to secure financing for its members, none had successfully obtained a loan from the Bank of Industry.
He added that switching to alternative energy sources, including compressed natural gas (CNG), remained financially challenging.
Onuorah 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.
Energy accounts for half of production expenses
Also speaking, 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 while businesses borrowed at an average interest rate of 33%, their profit margins from bread sales remained below 30%.
Source: UGC
Olaniyi-Olopade also identified electricity and fuel expenses as major contributors to production costs, accounting for approximately 50% of bakery operating expenses.
She disclosed that 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.
Source: Legit.ng
