High Interest Rates, Power, Forex Top Challenges As Confidence Index Hits 52.1 in Q2

Manufacturers’ confidence in Nigeria returned to positive territory in the second quarter (Q2) 2026, with the Manufacturers CEO’s Confidence Index (MCCI), rising to 52.1 points from 48.7 in Q1 2026.

This was contained in the second quarter (Q2) 2026 Manufacturers CEOs Confidence Index (MCCI) published by the Manufacturers Association of Nigeria (MAN).

The report noted that the improved outlook was driven more by expectations around new government policies than by current business and employment conditions, as manufacturers continue to grapple with high interest rates, power shortages, limited finance and forex scarcity.

According to the report, the 3.4-point increase reflects a return of confidence in doing business in Nigeria, largely tied to the expected impact of the Nigeria Tax Act 2025, the Nigeria Industrial Policy, and the ‘Nigeria First’ Policy.

The index, which uses 50 points as the baseline, aggregates the views of 400 CEOs across MAN’s 14 industrial zones and 10 sectoral groups. A reading above 50 indicates confidence, while below 50 indicates pessimism.

Manufacturers projected further improvement in Q3 2026, with indices for business condition at 55.6, employment at 55.2 and production at 63.

The director-general of MAN, Mr. Segun Ajayi-Kadir stated that “uncertainties around government reforms over the past three years have subsided, assuring manufacturers that production incentives have regained maturity.”

Despite the optimism, Mr. Segun Ajayi-Kadir said access to finance emerged as the top challenge for manufacturers in Q2 2026, ranking first compared to sixth in Q1.

Two in every three CEOs cited commercial bank lending rates as a disincentive to productivity. They blamed high loan rates on the CBN’s Monetary Policy Rate, MPR, which currently stands at 26.5 per cent.

“The interest rate is the cost of credit for manufacturers and directly influences production costs. Although the MPR was recently slashed to 26.5 per cent and maintained there, it remains one of the highest in Africa. Consequently, there was limited flow of finance from commercial banks to manufacturers,” MAN DG stated.

He noted that other top challenges include frequent power outages, inadequate foreign exchange availability, high production costs, low patronage and multiple taxation.

He also decried overregulation and the continued visits by multiple tax authorities despite the Nigeria Tax Act 2025, which was meant to harmonise levies.

Ajayi-Kadir said government infrastructure spending had not translated into noticeable benefits for factories, forcing firms to self-provide power, transport and logistics at high cost.

“Delays at ports and poor patronage of Made-in-Nigeria products by MDAs also persisted. Only 27 per cent of manufacturing leaders said government capital expenditure was encouraging to manufacturing activity,” he added.

On the positive side, MAN reported improvements in local sourcing of raw materials, though it warned that insecurity in some regions could threaten the gains.

Regionally, confidence was strongest in Edo and Delta at 66.7 points, Kano at 63.9 and Abuja at 58.3. Zones with zero-bound confidence included Anambra at 41.7, Bauchi, Benue and Plateau at 40.0, and Ikeja at 47.7.

By sector, Motor Vehicle and Miscellaneous Assembly led with 69.4 points, followed by Wood and Wood Products at 66.7. The weakest were Pulp, Paper, Printing and Packaging at 38.6 and Electrical and Electronics at 42.5.

To sustain the momentum, Ajayi-Kadir recommended that the CBN further reduce the MPR to below 20 per cent, especially for manufacturing loans, and prioritise forex allocation for manufacturers importing machinery and raw materials.

“Other recommendations include giving legal force to Executive Orders 003 and 005 to enforce patronage of Made-in-Nigeria goods, halting multiple taxation, stopping arbitrary port charges, and supporting manufacturers with alternative energy like gas and solar.

“Manufacturing is key to economic survival, growth and development. Recognising this is essential to understanding manufacturers’ needs and to implement policies to support them,” he said.