N9.16tn Manufacturing Output Slowed by Weak Growth

Daftar Isi

Nigeria's Manufacturing Sector Faces Persistent Challenges Despite GDP Growth

The manufacturing sector in Nigeria contributed N9.16tn in nominal terms during the third quarter of 2025. However, this growth was modest, with a year-on-year increase of only 1.25 per cent, according to data from the National Bureau of Statistics (NBS). This figure has raised concerns among industry leaders, who argue that the country’s overall GDP growth of 3.98 per cent does not reflect meaningful economic progress without stronger industrial output.

The NBS reported that the manufacturing sector’s nominal contribution rose by 3.45 per cent compared to Q3 2024, when it stood at N8.85tn. The sector comprises 13 subsectors, including food and beverages, cement, basic metals, plastics, textiles, and oil refining. Despite this, many of these subsectors have shown inconsistent performance, with some even experiencing declines in real growth rates.

Industry Leaders Express Concern Over Slow Progress

In an interview with The PUNCH, Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN), highlighted the lack of transformative growth in the sector. He emphasized that while the headline GDP growth is positive, it does not translate into robust development without a corresponding rise in manufacturing output.

Ajayi-Kadir pointed out that the sector grew by only 1.25 per cent in Q3 2025, down from 0.76 per cent in the same period the previous year. He described this as sub-optimal, noting that growth without productive capacity fails to deliver inclusive prosperity. A quarter-on-quarter comparison also showed a decline in real growth, falling by 0.35 percentage points from 1.60 per cent in Q2 2025.

Mixed Performance Across Subsectors

According to the NBS, eight manufacturing subsectors improved year-on-year, while five experienced declines. Among those that saw reduced growth were Wood and Wood Products, Chemical and Pharmaceutical Products, Non-Metallic Products, Electrical and Electronics, and Other Manufacturing. These subsectors recorded negative growth rates ranging from 1.17 per cent to 3.75 per cent.

On the other hand, eight subsectors showed improvement. Textile, Apparel and Footwear, and Pulp, Paper and Paper Products showed signs of recovery but remained in recession, contracting by 2.41 per cent and 1.07 per cent respectively. Food, Beverage, and Tobacco continued to be the largest contributor to the sector, generating N3.08tn. In contrast, oil refining had the lowest nominal contribution at N2.69bn, despite recording the highest real GDP growth rate of 19.42 per cent.

Structural Pressures Hamper Industrial Growth

Ajayi-Kadir attributed the sector’s fragility to several structural challenges, including high energy costs, limited access to foreign exchange, and high interest rates. He noted that manufacturers continue to face unreliable power supply, leading to a surge in alternative energy costs. From N404.8bn in H2 2024, the cost of alternative energy increased by 67 per cent to N676.5bn in H1 2025.

He also highlighted the inadequate foreign exchange liquidity, with manufacturers accessing only 51 per cent of their forex needs through the official window. High borrowing rates of 37 per cent further limit the ability of small and medium enterprises (SMEs) to grow.

Calls for Policy Reforms

Ajayi-Kadir urged the Federal Government to take urgent steps to reposition the industry. His recommendations included a gradual reduction in interest rates, swift disbursement of the N1tn Industrialisation Stabilisation Fund, and strict enforcement of the Nigeria-First Policy to strengthen local content and protect strategic industries.

He stressed that Nigeria cannot build a resilient and competitive economy without a strong manufacturing base. “Manufacturing must be prioritised, protected, and deliberately powered to lead Nigeria’s economic transformation,” he said.

Sectors Like Solid Minerals and Oil Show Stronger Growth

While manufacturing struggled, other sectors such as solid minerals and oil delivered significant improvements. Quarrying & Other Minerals grew by 39.49 per cent, Coal Mining by 57.96 per cent, and Metal Ore by 59.11 per cent. These gains were partly driven by the allocation of an extra N1tn for the solid minerals sector, along with reforms in transparency and investment protection.

Oil refining also saw growth, attributed to increased local refining by the Dangote Refinery and modular refineries, rising gas-processing capacity, and the adoption of compressed natural gas (CNG).

Stakeholders Highlight Ongoing Challenges

Stakeholders and private sector groups have expressed concern over Nigeria’s weak industrialization and poor manufacturing performance. Experts like Dele Oye and Dr. Paul Alaje have warned about bottlenecks such as costly electricity, poor infrastructure, and hostile policies.

Dr. Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise, described manufacturing as still fragile and under pressure. He noted that high energy and logistics costs, expensive borrowing, reliance on imported inputs, and smuggling continue to erode competitiveness.

Despite signs of economic recovery, achieving higher, more inclusive, and sustainable growth will require addressing long-standing structural constraints, especially in agriculture, manufacturing, and trade.