The Manufacturers Association of Nigeria (MAN) has raised concerns over the weakening performance of Nigeria’s industrial sector, warning that the headline Gross Domestic Product (GDP) growth is masking mounting pressures on the real sector.
Reacting to the National Bureau of Statistics (NBS) Q2 2026 GDP report, MAN Director-General, Segun Ajayi-Kadir, said the industrial sector was facing severe structural challenges despite the economy recording overall real GDP growth of 4.43 per cent year-on-year in the second quarter, compared with 3.89 per cent in Q1 2026.
Ajayi-Kadir noted that industrial growth had almost halved from 7.46 per cent in Q2 2025 to 3.96 per cent in Q2 2026, describing the development as a worrying sign for the country’s productive sector.
He said manufacturing’s contribution to real GDP also fell from 9.57 per cent in Q1 2026 to 7.72 per cent in Q2, while real manufacturing growth moderated marginally from 3.29 per cent to 3.24 per cent.
“The growth trajectory remains disproportionately service-driven at 56.62 per cent of GDP, while industry accounts for just 17.23 per cent,” Ajayi-Kadir said.
He warned that growth driven largely by services and other non-tradable activities would not adequately strengthen foreign exchange reserves, address structural inflation or generate sustainable industrial employment.
“Ultimately, 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.
According to the MAN DG, the sharpest contraction within the industrial sector came from Electricity, Gas, Steam and Air Conditioning Supply, which declined by 10.63 per cent in Q2 2026.
He attributed the pressure on manufacturers to high electricity tariffs, elevated exchange rates and expensive financing, saying the combination had made it increasingly difficult for manufacturers, particularly small and medium-sized enterprises, to operate at installed capacity.
“Instead of expanding production lines or acquiring modern technology, most factories are fighting to keep the lights on, leaving Nigerian industries less competitive globally,” he said.
Ajayi-Kadir, however, noted that industrial performance varied considerably across subsectors, with capital-intensive industries recording stronger growth.
Oil refining surged by 43.94 per cent, which he attributed to increased domestic refining capacity, while cement production grew by 12.75 per cent.
In contrast, high-employment subsectors continued to struggle. Textile, Apparel and Footwear, which accounts 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, recorded modest growth of 2.79 per cent, with weak consumer purchasing power weighing on demand.
Ajayi-Kadir said the uneven performance posed a threat to wage employment and could trigger further job losses among lower- and middle-income Nigerians, while weak growth in basic consumer goods manufacturing could worsen food inflation.
To reverse the industrial decline, the MAN chief called for urgent intervention in electricity, financing, foreign exchange and industrial policy.
He urged the Nigerian Electricity Regulatory Commission to immediately approve Eligible Customer status for contiguous industrial clusters, which would enable manufacturers to enter direct bulk power purchase agreements with generation companies and reduce their dependence on distribution companies.
He also proposed a matching-grant facility through the Bank of Industry to support manufacturers investing in captive solar photovoltaic systems and battery storage.
On financing, Ajayi-Kadir 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 in lending to manufacturers and help lower interest rates.
He further advocated a prioritised and transparent foreign exchange clearance window within the official market for raw materials and capital machinery imports backed by Letters of Credit.
On industrial policy, the MAN DG urged the National Assembly to pass the Nigeria Industrial Policy 2025 into law, arguing that this would make its targets and incentives legally binding.
He also proposed integrating the Bureau of Public Procurement portal with a local content registry to automatically block budget releases to Ministries, Departments and Agencies that fail to meet a 60 per cent local procurement target.
In addition, he called for a Local Patronage Compliance Act that would give Nigerian manufacturers the right of first refusal and require a Certificate of Non-Availability from MAN through the Federal Ministry of Industry, Trade and Investment before foreign purchases could be made.
For the automotive industry, Ajayi-Kadir urged the government to enforce the 10-year tax relief provided for local vehicle assembly under the Nigeria Automotive Industry Development Plan while imposing punitive import surcharges on fully built imported vehicles.
He also recommended zero-rated Value Added Tax and early-stage tax exemptions for traceable domestic farm-to-factory supply chains to reduce raw material costs.
He proposed annual thresholds for imported goods where domestic production capacity remains limited, allowing local manufacturers time to build capacity before import restrictions are tightened.
Ajayi-Kadir warned that Nigeria could not rely on services and extraction alone to sustain economic development.
“Nigeria cannot sustain its growth momentum on services and extraction alone. A nation that trades and consumes what it does not produce builds prosperity on quicksand,” he said.
However, the Director/Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, offered a more positive assessment of the manufacturing figures.
Yusuf said manufacturing remained in positive territory at 3.24 per cent in Q2, only marginally below the 3.29 per cent recorded in Q1, describing the performance as noteworthy given the continuing pressures from energy, financing and logistics costs.
“Manufacturing remained in positive territory at 3.24 per cent, only marginally below the 3.29 per cent recorded in the first quarter. This resilience is noteworthy given the continuing pressures from energy, finance and logistics costs,” Yusuf said.
He described the Q2 GDP report as a positive signal, saying it showed that economic momentum was improving and that both oil and non-oil activities were contributing to the recovery.
According to him, the broad spread of sectoral growth provides a basis for cautious optimism about the economic outlook.
Yusuf, however, identified electricity, textiles, manufacturing, logistics, financing costs and weak consumer demand as areas requiring urgent attention to consolidate the recovery.
“The remaining sectoral weaknesses should be viewed as priorities for consolidating and broadening the recovery. A turnaround in electricity and textiles, renewed momentum in manufacturing, lower logistics and financing costs, and stronger consumer demand would substantially reinforce the gains already recorded,” he said.
“With consistent policies and focused implementation, the present recovery can become more industrial, employment-intensive and inclusive.”
