Nigeria’s manufacturing sector is expanding without developing the breadth needed to meet rising domestic demand, with imports accounting for 64 per cent of the market for manufactured goods and capturing an estimated $29.4 billion opportunity in 2025, according to a new report by SEID.

The high import penetration underscores the scale of economic leakage and the jobs and industrial opportunities Nigeria risks losing to competing economies as local manufacturers struggle to capture a larger share of the domestic market.

Launched by SEID at the 54th Annual General Meeting of the Manufacturers Association of Nigeria (MAN), ‘Nigerian Manufacturing Opportunity Report 2026’ examined five major manufacturing subsectors and found that the central challenge was no longer a lack of demand, but the inability of domestic producers to meet that demand competitively.

Speaking on the report, Managing Partner of SEID, Tubosun Akeju, said Nigeria already had the demand and industrial strengths needed to build a stronger manufacturing sector but must better understand where those strengths exist and deepen them to improve competitiveness.

Akeju said the report provides decision-makers with insights into the most immediate opportunities, areas where Nigeria is already making progress and the actions required to unlock greater value locally and position Nigerian manufacturers to compete beyond the domestic market.

The report found that manufacturing growth had become increasingly concentrated, with almost 90 per cent of the 3.3 per cent expansion recorded in the first half of 2026 coming from only cement and food processing.

The finding raises fresh concerns about the depth of Nigeria’s industrial recovery, with manufacturing’s contribution to gross domestic product (GDP) falling from 8.42 per cent in 2023 to 8.05 per cent in 2025. This leaves the sector about seven percentage points below the 15 per cent target set under the Nigeria Industrial Policy for 2030.

It said manufactured goods accounted for about 53 per cent of Nigeria’s total import bill, while imported products continued to dominate several industries despite a temporary decline in import values following foreign exchange liberalisation.

According to SEID, manufacturing output grew by only 1.4 per cent in 2025, although early 2026 figures showed an improvement to 3.3 per cent in the first half of the year, from 1.6 per cent in the corresponding period of 2025.

However, the concentration of growth in cement and food processing suggested that the improvement had yet to translate into broad-based industrial deepening, the report said.

Light manufacturing and packaging emerged as one of the clearest examples of the gap, with the report putting the size of the market at $15.9 billion but noting that domestic manufacturers meet only 20 per cent of demand.

Imports therefore supply about 80 per cent of the market, including machinery, components and equipment, leaving local manufacturers dependent on imported resins, tooling, components and other industrial inputs even where final assembly takes place locally.

The report also found that chemicals and pharmaceuticals remained the most import-dependent subsector, with $4.25 billion in imports despite strong domestic demand and an established domestic fertiliser industry.

Textiles, apparel and leather showed another worrying trend. Local production increased by only 5.8 per cent between 2024 and 2025, while imports jumped 53.8 per cent, pushing import penetration from 10.5 per cent to 14.6 per cent.

Food and agro-processing, however, emerged as one of the sector’s strongest opportunities, with a $10.93 billion market and the country’s strongest manufacturing export base, the report said.

Yet, processors continue to face supply constraints caused by fragmented agricultural value chains and annual post-harvest losses estimated at between N3.5 trillion and N5 trillion.

The report identified the missing link across the manufacturing sector as the depth of local value chains, arguing that Nigeria’s challenge was increasingly about converting existing demand and industrial capacity into deeper domestic production.

It said strengthening local value chains would enable manufacturers to source more inputs domestically, reduce import dependence, create more jobs and improve the competitiveness of Nigerian products in both domestic and export markets.