GDP: There is plunge in overall industrial growth – MAN

The Manufacturers Association of Nigeria (MAN) has raised a critical alarm about the precipitous plunge in overall industrial growth, which has nearly halved, from a robust 7.46% in Q2 2025 to a troubling 3.96% in Q2 2026, despite a reported GDP growth by the National Bureau of Statistics (NBS).

The National Bureau of Statistics (NBS) Q2 2026 Gross Domestic Product (GDP) report indicates an overall year-on-year real GDP growth rate of 4.43%, up from 3.89% in Q1 2026 and 4.23% in Q2 2025. While headline growth suggests economic resilience, a critical analysis reveals a widening disconnect between macroeconomic figures and real-sector vitality.

In its second quarter GDP report, MAN maintained that the growth trajectory remains disproportionately service-driven (56.62% of GDP), while the broader industrial sector (17.23% of GDP) is visibly suffocating under severe structural headwinds.

According to the manufacturers, 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.

MAN noted that 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.

“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.

“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,” noted MAN.

On the major Implications for the manufacturing sector and the economy, MAN said there is a contraction in labour-intensive sectors like textiles and vehicle assembly, slow growth in basic consumer goods manufacturing (such as Food & Beverages) signals supply-side constraints.

It added that without an expanding export-oriented manufacturing base, foreign exchange inflows will remain bound to volatile primary commodity exports, perpetuating pressure on the Naira and erosion of industrial capacity and technological obsolescence as manufacturers are suffocating under exorbitant energy tariffs and prohibitive borrowing costs,

To halt the industrial erosion, pivot the economy away from import dependency and unlock sustainable real-sector expansion, MAN therefore recommended strategic interventions including industrial energy security & grid optimization directing the Nigeria Electricity Regulatory Commission (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.

The Federal Government to 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.

Government is advised to deploy a dedicated credit guarantee scheme through MOFI and DBN to de-risk 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).

MAN also urged government to 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. Also 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.

Lastly, the manufacturers called for targeted sub-sector recovery & backward integration: Enforce the 10-year tax relief for local vehicle assembly, 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, and 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.

“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,” said the association.