Nigeria’s manufacturing grows 1.25% in Q3 amid easing inflationary pressure

Nigeria’s manufacturing sector grew by 1.25 percent in real terms in the third quarter of 2025 amid easing inflationary pressures.

The growth shows a stronger year-on-year performance compared to 0.8 percent in the same period of 2024, but lower than 1.6 percent recorded in the previous quarter as the sector continues to grapple with mixed signals of recovery, according to data from the National Bureau of Statistics.

The report also showed that the sector’s real contribution to GDP in the third quarter was 7.62 percent, lower than the 7.82 percent recorded in the same period of 2024 and lower than the 7.81 percent recorded in the second quarter of 2025.

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Headline inflation has slowed to its lowest level in 3 years and 7 months to 16.05 percent in October 2025, owing to declining food prices, bringing an unexpected respite for households and increasing their purchasing power.

In a policy brief on Nigeria’s third-quarter GDP performance, Muda Yusuf, director of the Centre for the Promotion of Private Enterprise, described manufacturing as “still fragile and under pressure,” with the sector growing by only 1.25 percent.

Yusuf noted that manufacturers continue to face “high energy and logistics costs, costly borrowing conditions, dependence on imported industrial inputs, and smuggling of competing products.”

He warned that without deliberate and sustained actions to address structural bottlenecks in agriculture, manufacturing, and trade, the country could struggle to convert its macroeconomic stability into broad-based economic relief.

Also, Frank Ike Onyebu, former chairman of Manufacturers Association of Nigeria (MAN), Apapa branch, told BusinessDay that the sector is yet to drive significant growth despite its vast economic potential.

“Nigeria has the potential to grow its manufacturing sector by as much as 10 percent year-on-year for the next couple of years if we choose to, because Nigeria’s manufacturing sector is still in its infancy. The potential for growth is inestimable,” Onyebu said.

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Segun Ajayi-Kadir, director general of MAN, in an earlier statement, called for further reduction in the country’s monetary policy rate to reduce borrowing cost for manufacturers and increase their GDP contribution.

Ajayi-Kadir noted that despite the improvement in the country’s macroeconomic indicators, manufacturers still contend with borrowing costs “ranging between 30 and 37 per cent,” describing the rates as “high, restrictive, and damaging to competitiveness.”

He said, “The rate hinders production and reduces the competitiveness of the sector.”

“While the emphasis on exchange rate stability and improved forex liquidity is crucial, it is essential to reduce the cost of funds to encourage borrowing for expansion and investment,” he added.

The sector has continued to record increased manufacturers’ confidence, which drove purchasing managers’ index (PMI) to 53.6 points in November, indicating a steady improvement in business conditions, despite a slight easing from October’s 54 points.

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This marks the 13th month of expansion, a trend propelled by easing inflationary pressures, successful new product launches and expanding customer demand across key sectors.

“Manufacturing and services were the main drivers behind output expansions in November,” the Stanbic PMI report said.

“Inflationary pressures showed notable signs of easing, offering relief to businesses and contributing to the positive trajectory.”

“Input costs increased at the slowest rate in almost five years, with softer rises in purchase prices and labour costs enabling firms to control expenses more effectively.”

Josephine Okojie-Okeiyi is a journalist with over five years’ reporting experience. She writes on industry, agriculture, commodities, climate change, and environmental issues. She is fellow of Thomson Reuters Foundation and Bloomberg Media Initiative for Africa.

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