Manufacturers Target 10.2% Contribution to GDP in 2026

After booking a fragile growth and declining contribution to the country’s economic growth, Nigerian manufacturers are optimistic that the sector’s contribution to Gross Domestic Product will hit 10.2% in 2026, writes Dike Onwuamaeze

Nigerian manufacturers are optimistic about the New Year. They are hoping that their fortunes would be better in 2026 than it was in 2025 when the manufacturing sector posted a fragile growth of 1.6 per cent and contributed 7.62 per cent to the country’s gross domestic product (GDP). Hence, the Manufacturers Association of Nigeria (MAN) is projecting that the sector’s real growth would reach 3.1 per cent while its contribution to real GDP is expected to rise to 10.2 per cent.

The manufacturers hinged their optimism on three premises. The first is the expected effective execution of incentives for under the new tax laws. The second is the operationalisation of the National Single Window Project and the third is the purposeful implementation of the Nigeria Industrial Policy in close alignment with the “Nigeria First” Policy framework.

They are also hoping that sustained reduction in lending rates and completion of the bank recapitalisation exercise “will enhance credit availability to manufacturers” and strengthen investment and capacity utilisation in the manufacturing sector.

In its economic outlook for Nigeria in 2026, PwC noted that adoption of technology in the manufacturing sector accelerated in 2025 with widespread deployment of blockchain, AIpowered predictive maintenance, automation, and IoT-driven smart factory systems.

PwC, therefore, projected that in 2026, manufacturing output is projected to grow by around 3.1 per cent, supported by new tax incentives, harmonised levies, and deeper adoption of AI automation and smart factory models.

It also said that in 2026, investment inflows are expected to increase moderately if ongoing tax incentives, credit support, and infrastructure improvements materialise.

Despite this, PwC warned that limited access to affordable credit, high borrowing costs, and infrastructure gaps culd constrain widespread investment across large-scale manufacturing projects.”

The Head of Equity Research West Africa at Stanbic IBTC Bank, Mr. Muyiwa Oni, expressed hope that better days are on the way of the Nigerian manufacturing sector.

Oni said: “We now see the Nigerian economy growing by 3.8 per cent y/y in 2025 and 4.1 per cent y/y in 2026. Both manufacturing and services are likely to see higher growth in 2025 compared to 2024 levels, based on the results from the PMI surveys so far this year.

“Elsewhere, the government has been visible in infrastructure, livestock development, easing trade constraints, and attracting investments in oil and gas and manufacturing.

“Aside from that, the Dangote refinery is expected to continue to have forward-linkage impact on other sectors of the economy. Additionally, likely lower interest rates in line with lower inflation and exchange rate stabilisation should support private consumption and business investments in 2026.

“Because of these factors, we see more sectors contributing to real GDP growth rate in 2026 compared to 2025, likely translating to an improvement in the quality of lives of the citizens compared to 2025.”

In its outlook for the manufacturing sector in 2026, the Centre for the Promotion of Private Enterprises (CPPE), said that the macro-economic gains that were recorded in 2025 would have positive impacts on the manufacturing sector. These macro-economic gains included greater foreign exchange market stability with prospects of gradual appreciation and deceleration in inflation that could eventually translate into lower interest rates

The Chief Executive Officer of CPPE, Dr. Muda Yusuf, said, “Given the import-dependent nature of Nigerian manufacturing, FX stability alone offers meaningful relief on input costs and planning certainty.”

Yusuf also said that the improving macroeconomic fundamentals are expected to support better manufacturing outcomes in 2026, especially for firms that are backward-integrated, less exposed to FX volatility and better aligned with domestic input sourcing.

“These segments are likely to record stronger returns on investment under current reform conditions,” he said.

Yusuf, however, warned that the optimistic expectations for the manufacturing sector must be carefully managed. He pointed out that structural bottlenecks in energy, logistics and ports could not be resolved within a single fiscal year.

“The biggest risks to manufacturing growth remain structural. High energy and logistics costs, expensive and short-tenured financing, unmanaged import competition, which can crowd out local producers if trade policy is weak. Without addressing these risks, Nigeria’s manufacturing sector will remain structurally uncompetitive,” Yusuf said.

Yusuf’s called for managed expectations might not be out of place. These structural challenges hindering the full realisation of the the potentials of the manufacturing sector, might have informed the PwC conclusion that the service-sector would lead Nigeria’s economic growth in 2026. It said that persistent structural bottlenecks in the real economy, especially agriculture, manufacturing and trade, are likely to remain constrained by insecurity, high energy and logistics costs, port inefficiencies, and import dependence.

It said, “These structural challenges are expected to continue suppressing productivity and raising operating costs across the real economy.

“As a result, recovery in employment-intensive sectors may remain slow in 2026 despite ongoing reforms and investment commitments.”

It recalled that in Q3 2025, the sector grew by 1.25 per cent, contributing 7.62 per cent to GDP despite structural challenges such as high energy and logistics costs, dependence on imported inputs, and weak export competitiveness.

“Raw material imports remained high at N3.53trillion in  H12025, while manufactured goods exports were limited, highlighting a persistent trade deficit and the need for stronger local production and export capacity.

“In 2026, demand for manufactured goods is expected to improve modestly as inflation eases and consumer purchasing power stabilizes,” PwC said.

The MAN CEO’s Confidence Index (MCCI) for Q3 2025 said that the manufacturing sector is over burdened with alternative energy cost of N676.6 billion and raw material import of N1.72 trillion in H1 2025. The sector also recorded 18,935 job losses in the same period.

The MCCI also reported high average lending rates of 36.6 per cent, a reduction in credit access to N7.72 trillion and rising unsold inventories of N1.04 trillion continue to limit performance.

“Overall, the sector’s fragile recovery calls for urgent policy actions to cut energy costs, strengthen FX liquidity and expand affordable credit access to accelerate growth,” the MCCI said.

Commenting on the MCCI, the Director General of MAN, Mr. Segun Ajayi-Kadir, said that it is important to emphasise that all current indices of the MCCI were below the 50-point threshold, indicating that the underlying challenges, particularly high inflation, exchange rates and interest rates have continued to weigh on the sector.

He said: “On a brighter note, the projected indices for the next quarter all remain above 50 points, showing sustained optimism among manufacturers.

“This optimism is buoyed not only by recent policy adjustments, such as the 50-basis point cut in the benchmark interest rate, the suspension of the 4.0 per cent Free-on-Board levy and the approval of tax incentives for local sourcing of raw materials, but also by strong expectations that the forthcoming National Industrial Policy will be highly private sector-driven.

“Manufacturers are confident that a policy framework anchored on private sector participation will catalyse industrial competitiveness, stimulate productive investment and open new frontiers for growth.”

He added, “There is also a heightened anticipation for the Presidential assent to the 30 per cent value addition requirement on raw material exports, a policy that promises to deepen backward integration, reduce foreign exchange exposure and boost Nigeria’s export competitiveness.

“Further analysis shows that 9 out of 14 industrial zones recorded higher confidence scores, while 10 performed above the 50-point threshold, pointing to a gradual strengthening of optimism across several manufacturing hubs in the country.”

“It is, however, pertinent to note that this recovery is fragile and could easily falter if manufacturing does not receive deliberate, adequate industry-friendly interventions.

“As we often say in the industrial community, a nation that neglects manufacturing may grow in numbers, but not in wealth. Real growth begins only when raw potential is refined into productive capacity,” he said.