Nigerian manufacturing GDP is projected to reach 10.2% in 2026, driven by policy incentives, FX stability, and tech adoption despite structural hurdles

Nigerian manufacturers have expressed optimism that the sector’s contribution to Gross Domestic Product will reach 10.2 per cent in 2026, signalling a rebound after posting a fragile 1.6 per cent growth and a 7.62 per cent GDP contribution in 2025.

Also read: Tax reform boosts manufacturers but faces execution risk

The Manufacturers Association of Nigeria (MAN) projected that real growth for the sector would hit 3.1 per cent, supported by tax incentives, the National Single Window Project, and the purposeful implementation of the Nigeria Industrial Policy.

Tunde Mimiko, Head of Equity Research at Stanbic IBTC Bank, highlighted broader economic improvements, noting that GDP growth is expected to rise to 4.1 per cent in 2026.

Mimiko said initiatives such as infrastructure investments, trade facilitation, and the Dangote Refinery’s forward linkages are likely to enhance private consumption and business investments.

The adoption of advanced technologies such as blockchain, AI-powered predictive maintenance, automation, and IoT-driven smart factories is expected to accelerate manufacturing output, according to PwC.

The firm projected moderate increases in investment inflows, provided that ongoing credit support, tax incentives, and infrastructure improvements materialise.

Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprises, noted that macroeconomic improvements, including foreign exchange stability and moderating inflation, could reduce input costs for manufacturers.

He emphasised that backward-integrated firms aligned with domestic sourcing are likely to achieve stronger returns.

However, Yusuf cautioned that structural bottlenecks in energy, logistics, and port efficiency could limit widespread manufacturing expansion.

He warned that high energy and logistics costs, short-tenure financing, and unmanaged import competition could continue to constrain sector competitiveness.

MAN’s Confidence Index for Q3 2025 revealed ongoing challenges, including N676.6 billion in alternative energy costs, N1.72 trillion in imported raw materials, and high lending rates averaging 36.6 per cent.

Job losses totalled 18,935 in the first half of 2025, while unsold inventories reached N1.04 trillion.

Segun Ajayi-Kadir, MAN Director General, said optimism remains for 2026 due to policy adjustments such as a 50-basis point interest rate cut, suspension of the 4 per cent Free-on-Board levy, and tax incentives for local raw material sourcing.

He added that the anticipated 30 per cent value addition requirement for raw material exports is expected to deepen backward integration and enhance export competitiveness.

Also read: Pure water manufacturers create artificial scarcity to hike prices

Ajayi-Kadir concluded that while the recovery is fragile, sustained policy-driven support and private sector participation could catalyse industrial competitiveness, stimulate investment, and strengthen the sector’s long-term contribution to Nigeria’s economic growth.