Nigeria’s baking industry is facing mounting pressure as rising energy costs and high borrowing rates threaten the survival of businesses, with about 40 per cent of members of the Premium Breadmakers Association of Nigeria (PBAN) reportedly exiting the industry within two years.
PBAN President, Emmanuel Onuorah, disclosed this on the sidelines of the association’s 2026 Day-Out event in Lagos, themed “Baking Through the Economic Storm: Innovation, Efficiency and Growth for a Sustainable Industry.”
Onuorah said commercial banks were still charging small businesses between 33 and 34 per cent interest on loans despite the Central Bank of Nigeria’s (CBN) recent reduction of the Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent in September.
He explained that the high lending rates had made it difficult for bakery operators to secure funds for business expansion, modernisation and investment in alternative energy sources.
Citing his experience seeking a N12 million loan for a solar energy project, he said he was offered the facility at 34 per cent interest, alongside a requirement for 20 per cent counterpart funding.
“How do I pay back the loan when you are charging 34 per cent interest? We are not asking for free money. We are asking for single-digit interest rates that can help small businesses grow,” he said.
The PBAN president also criticised financial institutions, particularly the Bank of Industry (BoI), alleging that genuine entrepreneurs were not benefiting adequately from available credit facilities.
He further identified stringent loan requirements and rising energy expenses as major obstacles confronting bakery operators.
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Onuorah said the association was exploring alternative energy options, including Compressed Natural Gas (CNG) and hybrid oven burners that could operate on diesel and gas.
However, he estimated that transitioning to alternative energy systems would cost between N40 million and N50 million for a small bakery, an investment many operators could not afford without government intervention.
Also speaking, the Chairman of the PBAN Day-Out Organising Committee, Hadijat Olopade, said high borrowing costs and energy expenses were significantly undermining profitability in the baking industry.
She noted that while banks charged between 33 and 34 per cent interest on loans, profit margins in bread production remained below 30 per cent.
Olopade disclosed that energy accounted for approximately 50 per cent of production costs, revealing that her bakery’s monthly diesel expenditure had increased from N9 million to N19 million.
She lamented that operators had been unable to increase bread prices despite the rising cost of production, leaving businesses with shrinking profit margins.
The PBAN official appealed to the Federal Government to facilitate access to affordable financing, warning that more bakeries could shut down without urgent intervention.
Meanwhile, Manager of Crown Flour Mill Limited, Gbenga Sotimirin, urged bakery operators to embrace innovation, digital technology and improved production processes to remain competitive.
He said Nigeria’s growing population presented significant opportunities for the baking industry, encouraging operators to develop products that meet the changing needs of different consumer groups.
Sotimirin dismissed suggestions that the Nigerian bread market was saturated, arguing that considerable opportunities remained for businesses willing to innovate, improve efficiency and adopt data-driven decision-making.
PBAN, established about seven years ago, comprises owners, managing directors and partners of premium bakeries across Nigeria, with a mandate to promote standards, professionalism and sustainable growth in the industry.
