Manufacturing sector’s contribution to GDP in Nigeria is shrinking, says the Manufacturing Association of Nigeria (MAN) in its stand on Second Quarter 2026 GDP Report.
According to MAN ,the drop in manufacturing’s contribution to GDP from 9.57% to 7.72% in a single quarter highlights severe cost pressure, a high exchange rate, outrageous interest rates and exorbitant electricity tariffs facing domestic manufacturers. It says “Although manufacturing expanded year-on-year by 3.24%, its declining relative share indicates that industrial expansion is lagging behind broader economic activity. Underperformance of labour-Intensive Manufacturing Sub-sectors a disaggregated view of the manufacturing sub-sector.”
It adds: “Underperformance of Labour-Intensive Manufacturing Sub-sectors A disaggregated view of the manufacturing sub-sectors reveals a clear structural divergence. Growth was concentrated in capital-intensive and heavy industrial segments, notably Oil Refining (+43.94%) and Cement (+12.75%). The surge in oil refining reflects the onboarding of domestic refining capacity, illustrating the transformative impact of domestic value addition.
“ However, high-employment sub-sectors are either stalling or contracting. Textile, Apparel & Footwear, which accounts for 22.95% of manufacturing real GDP, contracted by -1.23%. Motor Vehicles & Assembly also contracted by -1.02%. Meanwhile, the largest manufacturing group, Food, Beverage & Tobacco (36.58% share), grew modestly by 2.79%, weighed down by weak consumer purchasing power and food inflation.”
It adds that “While Services (56.62%) and Trade (17.93%) lead national growth, they do not inherently generate the sustainable productivity, export diversification, or highdensity employment required to absorb Nigeria’s growing labour force”.
On inflation. MAN argues slow growth in basic consumer goods manufacturing (such as Food & Beverages) signals supply-side constraints, which could perpetuate food inflation, undermine household real incomes and worsen the level of poverty.
Regarding FX Vulnerability, MAN says without an expanding export-oriented manufacturing base, foreign exchange inflows will remain bound to volatile primary commodity exports, perpetuating pressure on the Naira.
And on erosion of industrial capacity and technological obsolescence, it argues: “Suffocating under exorbitant energy tariffs and prohibitive borrowing costs, manufacturers, particularly small and medium industries, are operating far below 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.
For MAN, “The Q2 2026 GDP performance serves as a reminder that sustainable national prosperity must be anchored in active domestic manufacturing, not just service consumption and extraction. MAN remains fully committed to partnering with the government to engineer this vital industrial renaissance.
MAN’s Recommendations
To halt the industrial erosion, pivot the economy away from import dependency and unlock sustainable real-sector expansion, it recommends the following strategic interventions:
- Industrial Energy Security & Grid Optimization
- Direct NERC to immediately approve Eligible Customer status for contiguous industrial clusters, allowing direct bulk Power Purchase Agreements (PPAs) with GenCos to bypass DisCo inefficiencies and eliminate arbitrary charges.
- Establish a matching-grant facility via the Bank of Industry to de-risk upfront capital sage systems. 4.2 Targeted Monetary & FX Interventions
- Deploy a dedicated credit guarantee scheme through MOFI and DBN to derisk commercial bank lending, forcing down interest rates for the manufacturing sector.
- Create a prioritised, transparent FX clearance window within the official market specifically for raw material and capital machinery import backed by Letters of Credit (LCs).
- Industrial Policy and Public Procurement Mandate
- Pass the Nigeria Industrial Policy 2025 as an Act of Parliament to make targets and incentives legally binding, preventing arbitrary changes or abandonment by future administrations
- Integrate the Bureau of Public Procurement portal with a local content registry, automatically blocking budget releases to MDAs that fail to meet a 60% local procurement target.
- Enact a Local Patronage Compliance Act requiring all MDAs to grant Nigerian manufacturers the right of first refusal in procurement, mandating a temporary “Certificate of Non-Availability” from MAN (through FMITI) before any foreign purchase. 4.4 Targeted Sub-Sector Recovery & Backward Integration
- Enforce the 10-year tax relief for local vehicle assembly under the NAIDP while applying punitive import surcharges on fully built imported vehicles to protect local plants.
- Apply zero-rated VAT and early-stage tax exemptions directly to traceable domestic farm-to-factory supply chains to immediately lower raw material sourcing costs.
- Set and enforce an annual threshold for the value of imported goods with limited domestic capacity, allowing a 3-year window for local assembly and an additional 2 years to transition to full-scale
