The Manufacturers Association of Nigeria (MAN) has raised concerns over the rapid weakening of Nigeria’s industrial sector, warning that the country’s 4.43 per cent economic growth in the second quarter of 2026 masked deepening challenges confronting manufacturers.

MAN, in its position on the Q2 2026 Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS), noted that while real GDP growth improved from 3.89 per cent in the first quarter to 4.43 per cent, industrial growth almost halved from 7.46 per cent recorded in Q2 2025 to 3.96 per cent in Q2 2026.

The association’s Director-General, Segun Ajayi-Kadir, attributed the industrial slowdown largely to the poor performance of the electricity, gas, steam and air-conditioning supply segment, which contracted by 10.63 per cent in the quarter.

He also highlighted a sharp decline in manufacturing’s contribution to real GDP, which fell from 9.57 per cent in Q1 2026 to 7.72 per cent in Q2.

According to MAN DG, real manufacturing growth also edged down from 3.29 per cent in the first quarter to 3.24 per cent in the second quarter.

He said the figures pointed to a widening gap between headline economic growth and the performance of the productive sectors of the economy.

While services accounted for 56.62 per cent of GDP and trade contributed 17.93 per cent, he argued that continued dependence on services and extractive activities would not provide the productivity, export diversification and employment opportunities required to sustain Nigeria’s economic expansion.

“Headline GDP growth driven by non-tradable service activities will fail to strengthen foreign exchange reserves, reduce structural inflation or create sustainable mass industrial jobs,” he said.

Warning that Nigeria could not sustain economic growth driven by services and extraction alone, he stressed the need to strengthen domestic manufacturing and value addition.

The MAN boss’ analysis of manufacturing subsectors showed that growth was concentrated in capital-intensive and heavy industrial activities.

Oil refining recorded the strongest growth at 43.94 per cent, while cement grew by 12.75 per cent.

The DG said the performance of oil refining demonstrated the potential of domestic refining capacity and value addition to transform the economy.

However, labour-intensive manufacturing activities recorded weaker performances, he added.

Textile, apparel and footwear, which account for 22.95 per cent of manufacturing real GDP, contracted by 1.23 per cent, while motor vehicles and assembly declined by 1.02 per cent.

Food, beverage and tobacco, the largest manufacturing group with a 36.58 per cent share, grew by only 2.79 per cent.

He attributed the modest performance of the subsector to weak consumer purchasing power and food inflation.

Ajayi-Kadir warned that the poor performance of labour-intensive manufacturing could worsen employment vulnerability, particularly among low- and middle-income Nigerians.

He also cautioned that slow growth in basic consumer goods manufacturing could prolong supply-side pressures, undermine household incomes and exacerbate poverty.

According to him, manufacturers face severe cost pressures from exchange rate volatility, high interest rates and exorbitant electricity tariffs.

He noted that the challenges were forcing manufacturers, particularly small and medium-sized enterprises, to operate significantly below installed capacity. Rather than expanding production lines or investing in modern technology, many factories are struggling to remain operational, he said.

He warned that the situation could lead to the erosion of industrial capacity and technological obsolescence, leaving Nigerian manufacturers increasingly uncompetitive in global markets.

He also linked the weakness of the manufacturing sector to Nigeria’s FX vulnerability, arguing that without a stronger export-oriented manufacturing base, the country would remain dependent on volatile primary commodity exports for foreign exchange.

To reverse the industrial decline, he called for urgent interventions targeting energy, financing, foreign exchange and industrial policy. He also urged the Nigerian Electricity Regulatory Commission (NERC) to immediately approve eligible-customer status for contiguous industrial clusters, enabling them to enter into direct bulk power purchase agreements with generation companies and bypass distribution company inefficiencies.

He also proposed a matching-grant facility through the Bank of Industry (BoI) to support manufacturers investing in captive solar photovoltaic systems and battery storage.

On financing, he called for a dedicated credit guarantee scheme through the Ministry of Finance Incorporated and the Development Bank of Nigeria to reduce the risks faced by commercial banks lending to manufacturers and ultimately bring down interest rates.

He further recommended the creation of a prioritised and transparent FX clearance window within the official market for raw materials and capital machinery imports backed by letters of credit.

He also urged the government to pass the Nigeria Industrial Policy (NIP) 2025 into law to make industrial targets and incentives legally binding and protect them from arbitrary changes by future administrations.

He further proposed integrating the Bureau of Public Procurement portal with a local content registry and automatically blocking budget releases to ministries, departments and agencies that fail to meet a 60 per cent local procurement target.

Also calling for a Local Patronage Compliance Act that would give Nigerian manufacturers the right of first refusal in public procurement, subject to a temporary Certificate of Non-Availability where local products cannot meet requirements, he said the automobile industry should enforce the 10-year tax relief for local vehicle assembly under the National Automotive Industry Development Plan, alongside punitive import surcharges on fully built imported vehicles.

He also recommended zero-rated VAT and early-stage tax exemptions for traceable domestic farm-to-factory supply chains, as well as a phased approach to replacing imported goods where domestic production capacity is limited.
These measures, he said, are necessary to move the economy away from import dependency and establish manufacturing as a stronger foundation for sustainable economic growth.