Nigeria’s Manufacturing Sector Reports Strongest Performance In August 2026 Despite Headwinds

The manufacturing sector in Nigeria recorded the strongest performance, supported by foreign-exchange stability, exchange-rate appreciation and improved demand, according to the Nigerian Economic Summit Group (NESG).

Services and agriculture also posted gains, pointing to a broad-based expansion in business activity.

The report indicated that Nigeria’s Current Business Performance Index rose to 112.7 points in August from 108.6 points in July.

According to the Group, manufacturing recorded the strongest business performance, while firms continued to face constraints including inadequate power supply, limited access to financing, among others. 

Joseph Ogebe, Interim Director, Research and Development at the NESG, speaking with CNBC Africa further unpacked the report, adding that firms continued to cite inadequate power supply, limited access to financing, logistics challenges and rising rental costs as key constraints.

Businesses surveyed by NESG however expect conditions to improve over the next one to three months, with manufacturing seen leading further growth.

The group said better access to sustainable financing for MSMEs would help production, competitiveness and job creation.

Ogebe said the August reading was not only higher than the previous month’s level but also above the roughly 107-point reading recorded a year earlier.

“We’ve seen steady increases in business performance since this year, but this current business performance which we experienced in August is much higher than what we’ve seen since the last six months,” Ogebe said in a TV interview.

He said the latest print pointed to stronger business confidence across much of the economy, adding that the August performance was the strongest in recent months. According to Ogebe, Nigeria had not seen this level of business confidence in recent times, including the period following geopolitical disruptions that weighed on sentiment.

Manufacturing was the biggest driver of the August improvement. Ogebe said survey respondents in the sector cited greater foreign-exchange stability and a recent appreciation in the exchange-rate market as key supports for business confidence.

He also said manufacturers reported stronger demand in recent months, helping lift current operating conditions. That combination of improved demand and a more stable currency environment appears to have eased some of the uncertainty that had weighed on factory activity earlier in the year.

The services sector also contributed to the stronger reading. Ogebe said businesses in financial services and telecommunications were among the main drivers of improved confidence in non-industrial segments of the economy.

Agriculture, while a smaller contributor than manufacturing and services, also showed steady improvement in the survey, he added. Taken together, the sectoral results suggest the August expansion was broad-based rather than concentrated in a single part of the economy.

Still, the stronger headline reading did not mean longstanding bottlenecks had eased materially. Ogebe said firms continued to report inadequate power supply, limited access to finance, logistics challenges and rising rental costs as major constraints on operations.

“These are two big bottlenecks that we think if they are softened going forward in the next one to three months, we could see positive improvements across all the sectors,” he said, referring to the cost of doing business and weak investment appetite.

Ogebe said the NESG’s business confidence monitor also tracks a cost of doing business index, which has shown persistent pressure over the past several months. He said businesses across sectors were facing rising operating expenses tied to energy, transport, finance and occupancy costs.

That pressure comes as Nigerian firms also grapple with elevated borrowing costs. Ogebe noted that the monetary policy rate is above 26%, adding that borrowing from banks has become more burdensome for small and medium-sized businesses.

He said that while large corporates may have buffers to absorb some of the headwinds, smaller firms remain more exposed to tighter financial conditions. For that reason, he argued that creating more sustainable ways to finance micro, small and medium-sized enterprises would be critical to preserving output, competitiveness and job creation.

“If we could come from improving finance to MSMEs, that would be a big way for them to be able to produce, compete, and also expand production and create more jobs for people,” Ogebe said.

He described small businesses as the backbone of the economy and a major source of employment, making credit access a policy issue with implications beyond company balance sheets. Easier financing, in his view, would help firms maintain operations and invest in future growth at a time when many remain cautious.

That caution is also showing up in investment decisions. Ogebe said business managers surveyed by NESG indicated a desire to invest but remained hesitant, partly because of uncertainty around the broader operating environment and the approach of the election season.

The implication is that while current business activity improved in August, stronger capital spending may take longer to materialize if firms remain in wait-and-see mode. Any delay in private investment could temper the pace of expansion in the months ahead, especially for smaller operators with less room to absorb shocks.

Even so, sentiment for the near term remains upbeat. Ogebe said firms surveyed across sectors broadly expect the business environment to improve over the next one to three months, extending the momentum seen in August.

Manufacturing is expected to remain the strongest growth segment, supported by exchange-rate appreciation, firmer consumer demand and the gradual effect of macroeconomic reforms still working through the economy. Ogebe said some parts of the non-manufacturing economy, including crude oil and gas, could also improve on the back of higher oil prices and increased production, though likely at a slower pace than manufacturing.

He also argued that discussions around employment should focus not only on the number of jobs created but also on productivity and job quality. In his view, decent and more productive jobs are essential to lifting incomes and improving living standards.

The August data offers a more encouraging snapshot of business conditions in Africa’s largest economy, but it also underscores how fragile that recovery could remain if structural constraints are not addressed. Investors and policymakers will likely be watching whether stronger confidence in manufacturing and services can be sustained into the final months of the year, and whether financing and infrastructure bottlenecks begin to ease