Business
Manufacturing GDP rises 3.3% to N4.13trn amid renewed optimism
By yinka Kolawole
At the backdrop of improved optimism among manufacturers in Nigeria’s business environment, the manufacturing sector contributed N4.128 trillion to the nation’s Gross Domestic Product, GDP, in the second quarter of 2026 (Q2’26), indicating a 3.3 percent year-on-year (y/y) increase compared to N3.998 trillion recorded in Q2’25.
Data from the National Bureau of Statistics (NBS), however, showed that the sector’s performance weakened sharply on a quarter-on-quarter (q/q) basis, falling 15.9 percent from N4.906 trillion recorded in the previous quarter (Q1’26), highlighting persistent structural pressures confronting manufacturers in the country.
Recall that the Q2’26 Manufacturers’ CEOs Confidence Index (MCCI) released by the Manufacturers Association of Nigeria (MAN) showed that the aggregate index rose to 52.1 points in Q2’26, up from 48.7 points in Q1’26, signalling improved confidence and a return to positive business sentiment by Nigerian manufacturers.
MAN, however, cautioned that the improvement was driven more by expectations about Q3’26 than actual Q2’26 operating conditions.
The development came as MAN raised the alarm over a sharp deterioration in overall industrial growth, while analysts warned that the manufacturing recovery remains fragile despite signs of improving private sector activity.
According to NBS data, real manufacturing growth stood at 3.24 per cent in Q2’26, only marginally below the 3.29 per cent recorded in Q1’26.
At the backdrop of improved optimism among manufacturers in Nigeria’s business environment, the manufacturing sector contributed N4.128 trillion to the nation’s Gross Domestic Product, GDP, in the second quarter of 2026 (Q2’26), indicating a 3.3 percent year-on-year (y/y) increase compared to N3.998 trillion recorded in Q2’25.
Data from the National Bureau of Statistics (NBS), however, showed that the sector’s performance weakened sharply on a quarter-on-quarter (q/q) basis, falling 15.9 percent from N4.906 trillion recorded in the previous quarter (Q1’26), highlighting persistent structural pressures confronting manufacturers in the country.
Recall that the Q2’26 Manufacturers’ CEOs Confidence Index (MCCI) released by the Manufacturers Association of Nigeria (MAN) showed that the aggregate index rose to 52.1 points in Q2’26, up from 48.7 points in Q1’26, signalling improved confidence and a return to positive business sentiment by Nigerian manufacturers.
MAN, however, cautioned that the improvement was driven more by expectations about Q3’26 than actual Q2’26 operating conditions.
The development came as MAN raised the alarm over a sharp deterioration in overall industrial growth, while analysts warned that the manufacturing recovery remains fragile despite signs of improving private sector activity.
According to NBS data, real manufacturing growth stood at 3.24 per cent in Q2’26, only marginally below the 3.29 per cent recorded in Q1’26.
MAN’s Director-General, Segun Ajayi-Kadir, said the broader industrial picture was troubling, noting that overall industrial growth had nearly halved from 7.46 per cent in Q2’25 to 3.96 per cent in Q2’26.
Ajayi-Kadir said: “We must raise a critical alarm about the precipitous plunge in overall industrial growth, which has nearly halved, from a robust 7.46 per cent in Q2’25 to a troubling 3.96 per cent in Q2’26.”
He attributed the erosion largely to the electricity, gas, steam and air-conditioning supply segment, which contracted by 10.63 per cent during the quarter.
The MAN boss also expressed concern over the sharp decline in manufacturing’s share of real GDP, from 9.57 per cent in Q1’26 to 7.72 per cent in Q2’26.
According to him, the decline “highlights severe cost pressure, a high exchange rate, outrageous interest rates and exorbitant electricity tariffs facing domestic manufacturers.”
He said the sector’s 3.24 per cent year-on-year expansion masked a worrying structural weakness, as manufacturing continued to lag behind broader economic activity.
According to him, the Q2’26 GDP performance serves as a reminder that sustainable national prosperity must be anchored in active domestic manufacturing, not just service consumption and extraction.
A breakdown of the sector showed that growth was concentrated in capital-intensive and heavy industrial segments. Oil refining expanded by 43.94 per cent, while cement grew 12.75 per cent, reflecting increased domestic refining capacity and stronger domestic value addition.
However, labour-intensive segments performed poorly. Textile, apparel and footwear, which account for 22.95 per cent of manufacturing real GDP, contracted 1.23 per cent, while motor vehicles and assembly declined 1.02 per cent.
Food, beverage and tobacco, the largest manufacturing group with a 36.58 per cent share, grew by 2.79 per cent, constrained by weak consumer purchasing power and persistent food inflation.
Resilient manufacturing growth
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, CPPE, Muda Yusuf, described the 3.24 percent manufacturing growth as resilient, given the continuing energy, financing and logistics pressures.
He said food, beverages and tobacco grew 2.79 per cent, electrical and electronics 1.51 per cent, while non-metallic products expanded 2.17 per cent.
“Although these rates moderated, they confirm that productive activity is still expanding and could respond strongly to a reduction in structural costs,” Yusuf said.
He called for an accelerated turnaround in the power sector, describing electricity reform as a central pillar of Nigeria’s industrial and investment strategy.
He also advocated targeted support for high-employment value chains, including agro-processing, textiles and garments, pharmaceuticals, automotive components, basic metals, chemicals, construction materials and light manufacturing.
On his part, President of the Association of Small Business Owners of Nigeria (ASBON), Dr Femi Egbesola, said that although manufacturing is not contracting in absolute terms, its growth remains too weak to significantly raise its contribution to the nation’s GDP.
Egbesola identified high energy and production costs, exchange-rate volatility, expensive credit, multiple taxes, weak consumer purchasing power and inadequate infrastructure as major constraints limiting manufacturers’ capacity utilisation and competitiveness.
“The sector continues to grapple with high energy and production costs, exchange-rate volatility, expensive credit, multiple taxes, weak consumer purchasing power and inadequate infrastructure. These factors are reducing manufacturers’ capacity utilisation and competitiveness,” he said.
Stanbic IBTC Bank projects a brighter outlook, saying that manufacturing could lead Nigeria’s growth in 2026. Its August PMI rose to 54.3 from 52.5 in July, marking the seventh consecutive month of private-sector expansion and a 29-month high.
Head of Equity Research, West Africa, at Stanbic IBTC Bank, Muyiwa Oni, said stronger demand, new product launches and improved availability of materials supported the August expansion.
“The strong PMI reinforces expectations for a robust Q3’26 growth outcome,” Oni said.
