Manufacturing was constrained in 2025, recording successive quarterly declines of up to 1.25 per cent in the real growth rate. Yet stakeholders share a positive outlook dependent on new tax laws and the execution of the ‘Nigeria First’ policy, ARINZE NWAFOR writes
Manufacturing stakeholders, including the Manufacturers Association of Nigeria and the Centre for the Promotion of Private Enterprise, have projected that the country’s manufacturing sector will record a real growth of 3.1 per cent in 2026, with its contribution to real Gross Domestic Product rising to 10.2 per cent, provided key policy reforms are effectively implemented.
In its Outlook for 2026, MAN stated that the projected improvement would depend largely on the execution of incentives under the new tax laws, the operationalisation of the National Single Window Project and the purposeful implementation of the Nigeria Industrial Policy in alignment with the Nigeria First policy framework.
The Director-General of MAN, Segun Ajayi-Kadir, stated that the outlook signalled a gradual recovery for the sector, which recorded a real growth rate of 1.25 per cent in the third quarter of 2025.
Ajayi-Kadir said, “Real growth is projected to reach 3.1 per cent, while contribution to real GDP is expected to rise to 10.2 per cent. These gains, however, hinge on the effective execution of incentives under the new tax laws, the operationalisation of the National Single Window Project and the purposeful implementation of the Nigeria Industrial Policy in close alignment with the Nigeria First policy framework.”
MAN also projected improvements in key macroeconomic indicators that directly affect manufacturers. Ajayi-Kadir said the naira was expected to appreciate further to between N1,300 and N1,400 to the dollar, driven by a recovery in global oil prices, stronger external reserves, improved export earnings, increased foreign investment and higher remittance inflows.
On inflation, the association projected further moderation to 14 per cent in 2026, supported by easing food prices, stable energy costs and exchange rate appreciation. Nigeria’s headline inflation had eased to 14.45 per cent in November 2025 from 16.05 per cent in October.
MAN also anticipated a more accommodative monetary stance. Ajayi-Kadir said the group expected the Central Bank of Nigeria to cut the Monetary Policy Rate to about 23 per cent in line with the disinflationary trend, to stimulate credit expansion and output growth.
He added that lower lending rates and the completion of the banking sector recapitalisation exercise would improve access to credit for manufacturers, strengthen investment and boost capacity utilisation.
On the broader economy, MAN projected overall GDP growth of about four per cent in 2026, driven by higher oil output, improved fiscal space, expansion in the financial and manufacturing sectors and increased consumption during election campaigns in the fourth quarter of 2026.
Similarly, the CPPE, in its report document titled ‘Nigeria’s Manufacturing Sector: Outlook, Risks and Policy Priorities (2026)’, stated that manufacturing performance in 2026 would improve modestly if macroeconomic stability were sustained but warned that deep-seated structural constraints remained a major threat.
The Director of CPPE, Dr Muda Yusuf, said the challenges facing the sector were “predominantly structural, not cyclical,” noting that they required medium- to long-term solutions rather than short-term fixes.
Yusuf explained, “Structural bottlenecks in energy, logistics and ports cannot be resolved within a single fiscal year. However, the improving macroeconomic fundamentals are expected to support better manufacturing outcomes in 2026.”
He said firms that were backwards-integrated, less exposed to foreign exchange volatility and better aligned with domestic input sourcing were likely to post stronger returns on investment under the current reform conditions.
Yusuf identified high energy and logistics costs, expensive and short-tenured financing and unmanaged import competition as the biggest risks to manufacturing growth, warning that without addressing these issues, the sector would “remain structurally uncompetitive”.
He called on the Federal Government to prioritise macroeconomic stability, maintain foreign exchange market reforms and avoid disruptive policy reversals. He also urged the government to fix the power sector value chain by strengthening gas supply, generation, transmission and distribution, improving grid reliability, and fully implementing the Presidential Power Initiative.
On financing, Yusuf said development finance institutions should be empowered to provide lower-cost funds with longer tenors suited for manufacturing, arguing that this was necessary to address “clear market failures in commercial finance.”
He also called for smart trade and protection policies that would protect domestic manufacturers without harming consumer welfare, while deepening the implementation of the Nigeria First policy through enforcement, particularly by using public procurement at federal and state levels to prioritise Made-in-Nigeria goods.
According to CPPE, Nigeria’s manufacturing revival in 2026 would depend on managing structural risks while sustaining reform momentum. He added that effective implementation of reforms in power, trade and development finance would significantly enhance the sector’s growth prospects and competitiveness.
