MAN Raises Alarm As Industrial Growth Plunges To 3.96%

The Manufacturers Association of Nigeria (MAN) has raised the alarm over the weakening performance of Nigeria’s industrial sector, saying its real growth nearly halved from 7.46 per cent in the second quarter of 2025 to 3.96 per cent in the corresponding quarter of 2026.

MAN director-general, Segun Ajayi-Kadir, stated this on Thursday in the association’s reaction to the second-quarter 2026 Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS).

He said although Nigeria’s real GDP grew by 4.43 per cent year-on-year in Q2 2026, up from 3.89 per cent in Q1 2026 and 4.23 per cent in Q2 2025, the headline figure masked significant weaknesses in the real economy.

Ajayi-Kadir said services accounted for 56.62 per cent of GDP in the quarter, while the broader industrial sector contributed only 17.23 per cent.

He said the sharp slowdown in industrial growth was driven largely by the electricity, gas, steam and air-conditioning supply segment, which contracted by 10.63 per cent during the quarter.

The MAN DG also expressed concern over the declining contribution of manufacturing to the economy, noting that its share of real GDP fell from 9.57 per cent in Q1 2026 to 7.72 per cent in Q2.

According to him, real manufacturing growth also eased marginally from 3.29 per cent in the first quarter to 3.24 per cent in the second quarter.
He attributed the weakening manufacturing performance to high production costs, exchange-rate pressures, high interest rates and soaring electricity tariffs.

Ajayi-Kadir said the modest manufacturing growth did not represent a broad-based industrial recovery, noting that performance was concentrated mainly in capital-intensive and heavy industrial activities.

He said oil refining recorded the strongest growth among the manufacturing subsectors at 43.94 per cent, while cement grew by 12.75 per cent.

However, labour-intensive manufacturing subsectors performed poorly, with textile, apparel and footwear contracting by 1.23 per cent, while motor vehicles and assembly declined by 1.02 per cent.

He said food, beverage and tobacco, the largest manufacturing group with a 36.58 per cent share of manufacturing real GDP, grew by only 2.79 per cent, attributing the modest performance to weak consumer purchasing power and food inflation.

The MAN DG warned that continued weakness in labour-intensive manufacturing could worsen employment vulnerability, particularly among low- and middle-income Nigerians.

He also warned that sluggish growth in basic consumer goods manufacturing could prolong supply-side pressures, undermine household incomes and exacerbate poverty.

Ajayi-Kadir said continued dependence on services and primary commodity exports would not provide the productivity, export diversification and employment opportunities required to sustain Nigeria’s economic expansion.

He warned that headline GDP growth driven largely by non-tradable services would do little to strengthen foreign exchange reserves, reduce structural inflation or create sustainable mass industrial jobs.

According to him, the trend could result in employment fragility, greater foreign exchange vulnerability and erosion of Nigeria’s industrial capacity and technological capability.

To reverse the decline, MAN called for urgent intervention in industrial energy, financing, foreign exchange and local procurement.

The association urged the Nigerian Electricity Regulatory Commission (NERC) to approve Eligible Customer status for contiguous industrial clusters to enable them enter into direct bulk power purchase agreements with generating companies.

It also proposed a matching-grant facility through the Bank of Industry to support manufacturers investing in captive solar photovoltaic systems and battery storage.

On financing, MAN called for a dedicated credit guarantee scheme through the Ministry of Finance Incorporated and the Development Bank of Nigeria to reduce the risks faced by commercial banks lending to manufacturers and ultimately lower borrowing costs.

The association further proposed a prioritised and transparent foreign exchange clearance window within the official market for raw materials and capital machinery imports backed by letters of credit.

MAN also urged the federal government to pass the Nigeria Industrial Policy 2025 into law to make industrial targets and incentives legally binding and protect them from arbitrary changes by future administrations.

It called for stronger enforcement of local procurement, incentives for vehicle assembly, tax relief for domestic supply chains and measures to strengthen local manufacturing.

Ajayi-Kadir said Nigeria must urgently shift from consumption-led growth to production-led growth, stressing that without a stronger manufacturing base, impressive GDP figures would remain largely disconnected from improvements in living standards and economic prosperity.