MAN Raises Alarm as Nigeria’s Industrial Growth Nearly Halves to 3.96%

The Manufacturers Association of Nigeria (MAN) has raised concerns over the weakening performance of Nigeria’s industrial sector, warning that the country’s headline economic growth is masking significant challenges in the real sector.

MAN, in its assessment of the National Bureau of Statistics (NBS) Q2 2026 Gross Domestic Product (GDP) report, noted that Nigeria’s real GDP growth accelerated to 4.43 per cent year-on-year in the second quarter, up from 3.89 per cent in Q1 2026 and 4.23 per cent recorded in Q2 2025.

However, the association said the headline growth figures conceal a widening disconnect between overall economic performance and the health of the real sector.

According to MAN, industrial growth fell sharply from 7.46 per cent in Q2 2025 to 3.96 per cent in Q2 2026, representing a decline of almost half.

The association attributed the deterioration largely to the Electricity, Gas, Steam and Air Conditioning Supply segment, which contracted by 10.63 per cent during the quarter.

Manufacturing also recorded weaker relative performance, with its contribution to real GDP declining from 9.57 per cent in Q1 2026 to 7.72 per cent in Q2. Real manufacturing growth moderated marginally from 3.29 per cent to 3.24 per cent.

MAN said the decline reflects the severe cost pressures confronting manufacturers, including high exchange-rate costs, elevated interest rates and rising electricity tariffs.

“While headline growth suggests economic resilience, a critical analysis reveals a widening disconnect between macroeconomic figures and real-sector vitality,” the association said.

MAN noted that Nigeria’s growth trajectory remains disproportionately driven by the services sector, which accounted for 56.62 per cent of GDP, while the broader industrial sector contributed 17.23 per cent.

The association argued that reliance on services and extraction would not be sufficient to generate sustainable productivity, export diversification and mass employment.

It warned that growth driven predominantly by non-tradable services would have limited impact on strengthening foreign exchange reserves, addressing structural inflation and creating sustainable industrial jobs.

Oil refining, cement outperform

The Q2 figures also showed significant differences across manufacturing subsectors.

MAN said growth was concentrated in capital-intensive and heavy industrial segments, with oil refining expanding by 43.94 per cent and cement growing by 12.75 per cent.

The association linked the strong performance of oil refining to the onboarding of domestic refining capacity, describing it as evidence of the potential impact of domestic value addition.

However, labour-intensive manufacturing subsectors performed considerably worse.

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.

The Food, Beverage and Tobacco segment, the largest manufacturing group with a 36.58 per cent share, recorded modest growth of 2.79 per cent. MAN attributed the subdued performance to weak consumer purchasing power and food inflation.

Association seeks targeted industrial reforms

To reverse the trend, MAN called for measures to reduce manufacturers’ energy and financing costs while improving access to foreign exchange.

The association urged the National Electricity Regulatory Commission (NERC) to approve Eligible Customer status for contiguous industrial clusters, allowing them to enter into direct bulk power purchase agreements with generating companies.

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

On financing, MAN called for a dedicated credit guarantee scheme through the Ministry of Finance Incorporated and the Development Bank of Nigeria to de-risk commercial bank lending and reduce interest rates for manufacturers.

It also recommended a prioritised and transparent foreign exchange clearance window for manufacturers importing raw materials and capital machinery backed by letters of credit.

MAN further called for stronger local procurement policies, including a 60 per cent local procurement target for government agencies and a requirement for Nigerian manufacturers to receive the right of first refusal in public procurement.

The association said the Q2 2026 GDP performance reinforces the need for Nigeria to anchor sustainable economic growth on domestic manufacturing rather than services consumption and extraction.