The Manufacturers Association of Nigeria (MAN) has warned that Nigeria’s headline economic growth remains fragile because it is being driven largely by services and extractive activities rather than a broad-based expansion of productive capacity.
It also raised the alarm over the worsening state of the country’s industrial sector, saying manufacturing growth has nearly halved from 7.46 percent in the second quarter of 2025 to 3.96 percent in Q2 2026, reports Daily Independent.
Reacting to the latest Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS), the association identified electricity, gas, steam and air-conditioning supply sector as a major drag on industrial performance, noting that it contracted sharply by 10.63 percent in Q2 2026.
It also expressed concern over the steep decline in manufacturing’s contribution to real GDP, which fell from 9.57 percent in Q1 2026 to 7.72 percent in Q2, even as the sector recorded marginal year-on-year growth of 3.24 percent, compared with 3.29 percent in the preceding quarter.
MAN said the decline in manufacturing’s relative contribution was a clear indication that industrial activity was expanding much more slowly than the wider economy.
“The drop in manufacturing’s contribution to GDP from 9.57 percent to 7.72 percent in a single quarter highlights severe cost pressure, a high exchange rate, outrageous interest rates and exorbitant electricity tariffs facing domestic manufacturers,” the association said.
According to MAN, the composition of manufacturing growth also reveals a worrying structural divergence, with expansion concentrated largely in capital-intensive and heavy industrial segments.
Oil refining recorded a robust 43.94 percent growth, while cement expanded by 12.75 percent. However, labour-intensive industries that provide significant employment opportunities either stagnated or contracted.
The textile, apparel and footwear segment, which accounts for 22.95 percent of manufacturing real GDP, contracted by 1.23 percent, while motor vehicles and assembly declined by 1.02 percent.
Similarly, the food, beverage and tobacco segment, the largest manufacturing group with a 36.58 percent share, grew by only 2.79 percent.
MAN attributed the subdued performance partly to weak consumer purchasing power and persistent food inflation.
The association warned that the trend could have serious implications for employment, household welfare and Nigeria’s external position.
It argued that while services account for 56.62 percent of economic activity and trade 17.93 percent, their dominance does not automatically deliver the productivity gains, export diversification and high-density employment required to absorb Nigeria’s rapidly expanding labour force.
MAN cautioned that contraction in labour-intensive industries such as textiles and vehicle assembly could trigger job losses among low- and middle-income households, while weak growth in basic consumer-goods manufacturing could further constrain domestic supply and prolong food inflation.
It added that Nigeria could not sustainably strengthen its foreign exchange reserves or reduce structural inflation without developing a competitive, export-oriented manufacturing base.
“A nation that trades and consumes what it does not produce builds prosperity on quicksand,” MAN warned. The association said manufacturers, particularly small and medium-sized enterprises, are operating significantly below installed capacity, with many firms now focused more on survival than expansion.
To reverse the industrial decline, MAN urged the government to direct the Nigerian Electricity Regulatory Commission (NERC) to immediately approve eligible customer status for contiguous industrial clusters, enabling manufacturers to purchase electricity directly in bulk.
It also called for power purchase agreements with generating companies to bypass distribution bottlenecks and eliminate arbitrary charges, alongside matching grants through the Bank of Industry to support manufacturers investing in captive solar photovoltaic and battery-storage systems.
MAN further proposed a dedicated credit guarantee scheme through the Ministry of Finance Incorporated and the Development Bank of Nigeria to reduce lending risks and force down interest rates for manufacturers.
It also demanded a transparent foreign exchange clearance window within the official market for raw materials and capital machinery imports backed by Letters of Credit.
Additionally, the association urged government to integrate the Bureau of Public Procurement portal with a local-content registry and automatically block budget releases to Ministries, Departments and Agencies that fail to meet a 60 percent local procurement target.
MAN maintained that without urgent measures to restore industrial competitiveness, Nigeria risks recording economic growth that is statistically positive but incapable of delivering sufficient jobs, stronger exports, improved household incomes and sustainable prosperity.
