Stakeholders link recovery to tax reforms, Nigeria First policy and improved macroeconomic stability
Nigeria’s manufacturing sector struggled through 2025, posting consecutive quarterly contractions of as much as 1.25 per cent in real growth. However, industry stakeholders remain cautiously optimistic that the sector will rebound in 2026 if key policy reforms are properly implemented.
Manufacturing groups, including the Manufacturers Association of Nigeria (MAN) and the Centre for the Promotion of Private Enterprise (CPPE), have projected that the sector could record real growth of 3.1 per cent in 2026, with its contribution to real Gross Domestic Product rising to 10.2 per cent.
In its 2026 Outlook, MAN said the expected improvement would be driven largely by the effective rollout of incentives under the newly enacted tax laws, the full deployment of the National Single Window Project, and a coordinated implementation of the Nigeria Industrial Policy in line with the Federal Government’s Nigeria First agenda.
The Director-General of MAN, Segun Ajayi-Kadir, described the outlook as a sign of gradual recovery following a difficult period for manufacturers. He noted that the sector recorded a modest 1.25 per cent real growth in the third quarter of 2025 after earlier contractions.
According to Ajayi-Kadir, “Real growth is projected to rise to 3.1 per cent, while manufacturing’s contribution to real GDP is expected to increase to 10.2 per cent. These gains, however, depend on how effectively incentives under the new tax regime are implemented, alongside the operationalisation of the National Single Window Project and alignment of industrial policy with the Nigeria First framework.”
MAN also forecast improvements in macroeconomic conditions critical to industrial performance. The association projected further appreciation of the naira to a range of N1,300 to N1,400 per dollar, supported by recovering global oil prices, stronger external reserves, improved export earnings, increased foreign investment inflows and higher diaspora remittances.
On inflation, MAN expects continued moderation to around 14 per cent in 2026, driven by easing food prices, more stable energy costs and exchange rate stability. Nigeria’s headline inflation had declined to 14.45 per cent in November 2025, down from 16.05 per cent recorded in October.
The association also anticipates a shift toward a more accommodative monetary policy environment. Ajayi-Kadir said MAN expects the Central Bank of Nigeria to reduce the Monetary Policy Rate to about 23 per cent, in line with the disinflationary trend, to stimulate credit growth and industrial output.
He added that lower borrowing costs, combined with the completion of the banking sector recapitalisation programme, would improve manufacturers’ access to finance, encourage new investments and raise capacity utilisation across the sector.
At the macro level, MAN projected overall economic growth of approximately four per cent in 2026, supported by higher crude oil production, improved fiscal conditions, expansion in the financial and manufacturing sectors, and increased consumer spending ahead of election-related activities in the final quarter of the year.
Meanwhile, the Centre for the Promotion of Private Enterprise also expressed guarded optimism, noting that manufacturing performance in 2026 could improve modestly if macroeconomic stability is sustained. However, it warned that deep-rooted structural challenges continue to weigh heavily on the sector.
In its report titled Nigeria’s Manufacturing Sector: Outlook, Risks and Policy Priorities (2026), CPPE said many of the sector’s problems are structural rather than cyclical and would require long-term solutions.
The Director of CPPE, Muda Yusuf, said constraints related to energy supply, logistics and port operations could not be resolved within a single fiscal year but acknowledged that improving macroeconomic fundamentals could support better outcomes in 2026.
He noted that manufacturers with strong backward integration, lower exposure to foreign exchange volatility and greater reliance on local inputs were more likely to record improved returns under the current reform environment.
Yusuf identified high energy and logistics costs, expensive short-term financing, and unregulated import competition as major threats to manufacturing growth, warning that failure to address these issues would leave the sector structurally uncompetitive.
He urged the Federal Government to sustain macroeconomic reforms, maintain stability in the foreign exchange market and avoid abrupt policy reversals. He also called for urgent reforms across the power sector value chain, including improved gas supply, stronger transmission and distribution networks, enhanced grid reliability and full implementation of the Presidential Power Initiative.
On financing, Yusuf said development finance institutions should be strengthened to provide long-term, low-cost funding tailored to manufacturers, arguing that such intervention is necessary to correct gaps in commercial lending.
He also advocated targeted trade and protection policies that safeguard local manufacturers without undermining consumer welfare, while calling for stricter enforcement of the Nigeria First policy, particularly through public procurement practices at both federal and state levels that prioritise locally manufactured goods.
According to CPPE, the revival of Nigeria’s manufacturing sector in 2026 will depend on effectively managing structural risks while sustaining reform momentum, adding that progress in power, trade and development finance reforms would significantly improve competitiveness and growth prospects.
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