By Seun Ibiyemi
The Manufacturers Association of Nigeria (MAN) has raised concerns over the widening gap between Nigeria’s headline economic growth and the performance of the real sector, warning that the country’s industrial base is facing severe structural challenges.
Reacting to the National Bureau of Statistics (NBS) second-quarter 2026 Gross Domestic Product (GDP) report, MAN noted that Nigeria’s real GDP growth rose to 4.43% year-on-year in Q2 2026, compared with 3.89% in Q1 and 4.23% in Q2 2025.
However, the association said the headline improvement masked a worrying decline in industrial performance, with overall industrial growth falling from 7.46% in Q2 2025 to 3.96% in Q2 2026.
MAN said the development reflected a growing disconnect between macroeconomic resilience and real-sector vitality, particularly as the industrial sector accounts for 17.23% of GDP.
The association said the growth trajectory remained disproportionately driven by services, which accounted for 56.62% of GDP, while the industrial sector continued to struggle.
According to MAN, manufacturing growth declined marginally from 3.29% in Q1 2026 to 3.24% in Q2, while manufacturing’s contribution to real GDP fell sharply from 9.57% to 7.72% over the same period.
It identified the Electricity, Gas, Steam and Air Conditioning Supply sector as a major drag on industrial performance, recording a contraction of 10.63% in Q2 2026.
MAN said the performance of labour-intensive manufacturing subsectors was particularly concerning, with Textile, Apparel and Footwear contracting by 1.23%, while Motor Vehicles and Assembly declined by 1.02%.
The association said the largest manufacturing group, Food, Beverage and Tobacco, which accounts for 36.58% of manufacturing real GDP, recorded only 2.79% growth, attributing the modest performance to weak consumer purchasing power.
It said the figures pointed to severe cost pressures confronting manufacturers, including high exchange rates, elevated interest rates, expensive electricity tariffs and rising input costs.
MAN warned that continued weakness in labour-intensive industries could result in job losses, particularly among low- and middle-income Nigerians, while undermining the economy’s capacity to absorb its growing workforce.
The association also cautioned against excessive reliance on services and extraction to drive economic growth, arguing that such activities could not deliver the level of productivity, export diversification and mass employment required for sustainable development.
It noted that sectors such as oil refining and cement recorded significant growth, expanding by 43.94% and 12.75%, respectively, but argued that broader industrial expansion remained inadequate.
MAN said the decline in manufacturing’s GDP contribution within a single quarter showed that industrial expansion was lagging behind overall economic activity.
The association warned that without a stronger export-oriented manufacturing base, Nigeria would remain vulnerable to foreign exchange pressures and dependence on imported goods.
It also said weak growth in basic consumer goods manufacturing could worsen food inflation and further erode household purchasing power.
MAN proposes measures to revive industry
To reverse the trend, MAN called for urgent interventions to improve industrial energy security, access to foreign exchange and affordable financing.
On electricity, the association recommended that the Nigerian Electricity Regulatory Commission immediately approve eligible-customer status for manufacturers, particularly those operating in contiguous industrial clusters.
It also proposed allowing manufacturers to enter into direct bulk Power Purchase Agreements with generation companies to bypass inefficiencies associated with distribution companies and eliminate arbitrary charges.
MAN further recommended credit guarantees through the Ministry of Finance Incorporated and the Development Bank of Nigeria to reduce lending risks and lower borrowing costs for manufacturers.
It called for support for manufacturers deploying captive solar photovoltaic and battery-storage systems to reduce dependence on the national grid.
On foreign exchange, the association proposed a prioritised and transparent FX clearance window for raw materials and capital machinery imports backed by letters of credit.
It also recommended targeted monetary and fiscal measures to ease the cost of capital and improve manufacturers’ access to foreign exchange.
MAN urged the government to strengthen local procurement policies by granting Nigerian manufacturers the right of first refusal in government procurement.
It proposed a Local Patronage Compliance Act requiring government ministries, departments and agencies to meet a 60% local procurement target.
The association also called for integration of the Bureau of Public Procurement portal with a local content registry to ensure compliance and prevent budget releases to agencies that fail to meet domestic sourcing requirements.
For the automotive sector, MAN recommended punitive import charges on fully built vehicles while providing a three-year transition period for local assembly.
READ ALSO:World Bank backs Nigeria’s electricity tariff, subsidy reforms
It also called for enforcement of the 10-year tax relief for local vehicle assembly under the Nigerian Automotive Industry Development Plan, with an additional two years to transition to full-scale manufacturing.
The association further proposed zero-rated VAT and early-stage tax exemptions for traceable domestic farm-to-factory supply chains to reduce raw material costs.
MAN said the Q2 2026 GDP report should serve as a warning that Nigeria’s economic growth must be anchored on domestic manufacturing, productivity and value addition rather than services and consumption alone.
It stressed that reversing industrial decline would require sustained government policies capable of improving competitiveness, attracting investment and protecting local production from premature import competition.
