Nigeria’s 4.43% Growth Paradox: Why Headline GDP Masks an Industrial Slump

The Manufacturers Association of Nigeria (MAN) has raised the alarm over the weakening performance of Nigeria's industrial sector, pointing out that despite headline Gross Domestic Product (GDP) growth, the real growth of the industrial sector nearly halved from 7.46% in Q2 2025 to 3.96% in Q2 2026.

The Director-General of MAN, Segun Ajayi-Kadir, stated this in reaction to the Q2 2026 GDP report released by the National Bureau of Statistics (NBS). Although real GDP grew by 4.43% year-on-year (up from 3.89% in Q1 2026 and 4.23% in Q2 2025), MAN warned that the headline figure masks severe structural headwinds and a widening disconnect between national macroeconomic statistics and real-sector vitality.

Key Highlights & Data

• Service-Driven Growth: The economy remains heavily lopsided toward services, which accounted for 56.62% of real GDP, while the broader industrial sector contributed just 17.23%.
• Drop in Manufacturing Share: Manufacturing’s contribution to real GDP fell significantly from 9.57% in Q1 2026 to 7.72% in Q2 2026. Real growth in manufacturing also edged down slightly from 3.29% to 3.24%.
• Contraction in Energy & Utilities: The sharp deterioration in overall industrial performance was primarily driven by the Electricity, Gas, Steam, and Air Conditioning Supply segment, which contracted by 10.63% in Q2 2026.
• Capital vs. Consumer Divergence:

Capital-Intensive Growth: Oil refining expanded by 43.94% and cement grew by 12.75%, driven by major industrial capacity coming online.

Labour-Intensive Decline: Consumer-oriented sectors struggled due to inflation and weak household purchasing power. Food, Beverage, and Tobacco (making up 36.58% of manufacturing GDP) grew by only 2.79%. Textile, Apparel, and Footwear contracted by 1.23%, and Motor Vehicles and Assembly declined by 1.02%.

Industry Concerns

The MAN Director-General highlighted several ongoing challenges that continue to choke domestic manufacturers:

1. Severe Cost Pressures: High exchange rates, exorbitant electricity tariffs, volatile foreign exchange markets, and outrageous interest rates continue to inflate production costs.
2. Underutilization & Employment Vulnerability: Many manufacturers, particularly Small and Medium-Sized Enterprises (SMEs), are operating far below installed capacity, choosing survival over expansion. The stagnation of labor-intensive sub-sectors threatens middle- and lower-income jobs.
3. FX and Supply Vulnerabilities: Growth driven by non-tradable services fails to build foreign exchange reserves, combat structural inflation, or create sustainable industrial employment.

MAN's Proposed Solutions & Urgent Demands

To reverse the industrial decline and build long-term economic resilience, MAN recommended several key measures to the Federal Government:

• Energy Security: Implement direct power-purchase agreements for industrial clusters through the Nigerian Electricity Regulatory Commission (NERC) under Eligible Customer status, alongside matching grants via the Bank of Industry (BOI) for captive solar PV systems and battery storage.
• Credit & Financing: Establish a dedicated credit guarantee scheme through the Ministry of Finance Incorporated (MOFI) and the Development Bank of Nigeria (DBN) to de-risk commercial lending and lower borrowing costs for manufacturers.
• FX Allocation: Provide a prioritized, transparent FX clearance window within official markets specifically for importing raw materials and essential machinery backed by Letters of Credit.
• Local Procurement & Tax Reliefs: Enact the Nigeria Industrial Policy, enforce a 60% local procurement mandate for government agencies, and offer zero-rated VAT and early-stage tax exemptions on domestic farm-to-factory supply chains.