POSITION OF THE MANUFACTURERS ASSOCIATION OF NIGERIA ON SECOND QUARTER 2026 GDP REPORT

1.0 Introduction
The Manufacturers Association of Nigeria (MAN) notes the National Bureau of Statistics (NBS) Q2 2026 Gross Domestic Product (GDP) report, which indicates

This rapid industrial erosion was driven mainly by Electricity, Gas, Steam & Air
Conditioning Supply, which recorded the sharpest contraction of -10.63% in Q2
2026. This was further compounded by a drastic drop in manufacturing’s share
of real GDP, which fell from 9.57% in Q1 2026 to 7.72% in Q2 2026, alongside a
marginal decline in real manufacturing growth from 3.29% to 3.24%.

Ultimately, headline GDP growth driven by non-tradable service activities will fail
to strengthen foreign exchange reserves, reduce structural inflation, or create
sustainable mass industrial jobs.

Therefore, Nigeria cannot sustain its growth momentum on services and extraction alone. A nation that trades and consumes what it does not produce builds prosperity on quicksand.
2.0 Strategic Insights from the Q2 2026 Figures

2.1 A Shrinking Manufacturing Contribution
The drop in manufacturing’s contribution to GDP from 9.57% to 7.72% in a single quarter highlights severe cost pressure, a high exchange rate, outrageous interest rates and exorbitant electricity tariffs facing domestic manufacturers. Although manufacturing expanded year-on-year by 3.24%, its declining relative share indicates that industrial expansion is lagging behind broader economic activity.

2.2 Underperformance of Labour-Intensive Manufacturing Sub-sectors
A disaggregated view of the manufacturing sub-sectors reveals a clear structural divergence. Growth was concentrated in capital-intensive and heavy industrial segments, notably Oil Refining (+43.94%) and Cement (+12.75%). The surge in oil
refining reflects the onboarding of domestic refining capacity, illustrating the transformative impact of domestic value addition.

However, high-employment sub-sectors are either stalling or contracting. Textile,
Apparel & Footwear, which accounts for 22.95% of manufacturing real GDP,
contracted by -1.23%. Motor Vehicles & Assembly also contracted by -1.02%.
Meanwhile, the largest manufacturing group, Food, Beverage & Tobacco (36.58%
share), grew modestly by 2.79%, weighed down by weak consumer purchasing
power and food inflation.

2.3 Over-Reliance on Low-Value-Addition Services
While Services (56.62%) and Trade (17.93%) lead national growth, they do not inherently generate the sustainable productivity, export diversification, or highdensity employment required to absorb Nigeria’s growing labour force.

3.0 Major Implications for the Manufacturing Sector & the Economy

• Employment Fragility: Contraction in labour-intensive sectors like textiles
and vehicle assembly directly threatens wage employment and risks triggering
job losses across lower- and middle-income demographics.

• Inflationary Spiral: Slow growth in basic consumer goods manufacturing
(such as Food & Beverages) signals supply-side constraints, which could
perpetuate food inflation, undermine household real incomes and worsen the
level of poverty.
• FX Vulnerability: Without an expanding export-oriented manufacturing base,
foreign exchange inflows will remain bound to volatile primary commodity
exports, perpetuating pressure on the Naira.
• Erosion of Industrial Capacity and Technological Obsolescence: Suffocating
under exorbitant energy tariffs and prohibitive borrowing costs,
manufacturers, particularly small and medium industries, are operating far
below installed capacity. Instead of expanding production lines or acquiring
modern technology, most factories are fighting to keep the lights on, leaving
Nigerian industries less competitive globally.

4.0 Conclusion and Strategic Recommendations
The Q2 2026 GDP performance serves as a reminder that sustainable national
prosperity must be anchored in active domestic manufacturing, not just service
consumption and extraction. MAN remains fully committed to partnering with the government to engineer this vital industrial renaissance.

To halt the industrial erosion, pivot the economy away from import dependency
and unlock sustainable real-sector expansion, we recommend the following
strategic interventions:
4.1 Industrial Energy Security & Grid Optimization

• Direct NERC to immediately approve Eligible Customer status for
contiguous industrial clusters, allowing direct bulk Power Purchase
Agreements (PPAs) with GenCos to bypass DisCo inefficiencies and
eliminate arbitrary charges.
• Establish a matching-grant facility via the Bank of Industry to de-risk
upfront capital expenditure for manufacturers deploying captive solar PV and battery storage systems.

4.2 Targeted Monetary & FX Interventions
• Deploy a dedicated credit guarantee scheme through MOFI and DBN to derisk commercial bank lending, forcing down interest rates for the manufacturing sector.
• Create a prioritised, transparent FX clearance window within the official
market specifically for raw material and capital machinery import backed
by Letters of Credit (LCs).

4.3 Industrial Policy and Public Procurement Mandate
• Pass the Nigeria Industrial Policy 2025 as an Act of Parliament to make
targets and incentives legally binding, preventing arbitrary changes or
abandonment by future administrations
• Integrate the Bureau of Public Procurement portal with a local content
registry, automatically blocking budget releases to MDAs that fail to meet
a 60% local procurement target.
• Enact a Local Patronage Compliance Act requiring all MDAs to grant
Nigerian manufacturers the right of first refusal in procurement,
mandating a temporary “Certificate of Non-Availability” from MAN
(through FMITI) before any foreign purchase.

4.4 Targeted Sub-Sector Recovery & Backward Integration
• Enforce the 10-year tax relief for local vehicle assembly under the NAIDP
while applying punitive import surcharges on fully built imported vehicles to protect local plants.
• Apply zero-rated VAT and early-stage tax exemptions directly to traceable
domestic farm-to-factory supply chains to immediately lower raw material
sourcing costs.
• Set and enforce an annual threshold for the value of imported goods with
limited domestic capacity, allowing a 3-year window for local assembly and
an additional 2 years to transition to full-scale manufacturing.