‘Rising Energy Cost Hampers Manufacturing’s Contribution To GDP In Q1’

Escalating energy costs and infrastructure deficiency largely contributed to poor performance of Nigeria’s industrial sector whose contribution to the country’s GDP remained low.

Reports showed the manufacturing industry recorded a modest growth of 3.29 per cent in Q1, 2026 up from 1.13 per cent in Q4 2025, supported largely by petroleum refining, food and beverages, cement, chemicals and pharmaceuticals.

The chief executive officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, in a policy memo noted with cautious optimism the country’s Q1 2026 GDP growth outcome released by the National Bureau of Statistics (NBS) which recorded a year-on-year real GDP growth of 3.89 per cent compared with 3.13 per cent in Q1 2025.

Yusuf, noted that though the manufacturing industry recorded a modest growth but its contribution to GDP remains below 10 per cent, highlighting the continuing structural constraints confronting the industrial sector.

He said that high energy costs, elevated interest rates, weak infrastructure, logistics bottlenecks and policy uncertainties continue to undermine industrial productivity and competitiveness.

The economy cannot achieve durable structural transformation without a stronger manufacturing base. Industrialisation remains the most sustainable pathway to large-scale job creation, export competitiveness and inclusive growth.

The construction and real estate sectors maintained solid momentum, jointly contributing close to 18 per cent to GDP, reflecting sustained infrastructure investments and growing investor interest in property-related assets.

Similarly, quarrying and minerals grew by 23.41 per cent while the cement sector expanded by 11.53 per cent, reflecting robust construction activities within the economy.

The non-oil sector accounted for 96.08 per cent of GDP, while the oil sector contributed just 3.92 per cent.

Despite accounting for over 96 per cent of GDP, the non-oil economy contributes less than 15 per cent of foreign exchange earnings. This reflects weak export competitiveness, low productivity and limited integration into global value chains.

The services sector remained the principal driver of growth, contributing 57.73 per cent to GDP and expanding by 4.31 per cent.

The ICT, financial services, trade, entertainment and construction posted particularly strong performances, reinforcing the increasing centrality of the digital and services economy to Nigeria’s growth structure.

The ICT sector grew by 10.98 per cent, financial services expanded by 8.54 per cent while the entertainment sector recorded 11.25 per cent growth. These sectors continue to demonstrate impressive resilience despite persistent structural and macroeconomic headwinds.