Nigeria’s Manufacturing Sector Remains Stagnant After 26 Years of Democracy
Dayo Thomas
The Centre for the Promotion of Private Enterprise, CPPE, says Nigeria’s manufacturing sector has remained largely stagnant despite 26 years of uninterrupted democracy. In its report titled ‘Nigeria’s Manufacturing Sector: Outlook, Risks and Policy Priorities 2026’_ CPPE notes that the sector’s contribution to GDP has slipped to 8.05% despite modest growth, while real output has struggled under persistent cost pressures. Manufacturers Association of Nigeria data is starker: the industrial sector’s share of GDP fell from 27.65% in 2010 to 21.08% under the 2019 rebased structure, and manufacturing recorded an average annual growth rate of -0.76% between 2019 and 2024, meaning it has been shrinking in real terms. The trend exposes a structural shift away from production toward low-production to services, raising questions about how much democracy has translated into industrialisation
CPPE Chief Executive Dr. Muda Yusuf says the challenges facing manufacturing are “predominantly structural, not cyclical,” and therefore require medium- to long-term solutions rather than quick fixes. He lists inadequate and costly infrastructure, especially power and logistics, port inefficiencies and supply chain bottlenecks, high energy costs driven by reliance on captive power, and an unfavourable regulatory environment as the core constraints. Other drags include unfair competition from cheap imports, especially from Asia, expensive and short-tenured financing, and weak consumer purchasing power. Yusuf warns that without addressing these issues, the sector will “remain structurally uncompetitive” despite improving macroeconomic fundamentals. The CPPE adds that structural bottlenecks in energy, logistics and ports cannot be resolved within a single fiscal year, so expectations for 2026 must be carefully managed.
The human and business toll is mounting. MAN reports that about 767 manufacturing companies shut down as of 2023, while over 18,000 jobs were lost in 2024. By end of 2024, unsold goods worth about N1.4 trillion were stacked in warehouses, driven by high costs, weak purchasing power, and disrupted supply chains. Energy remains the biggest drain: manufacturers spend nearly 40% of operational budgets on alternative energy due to unreliable grid supply, while those on diesel generators face fuel costs up to half their operating expenses. High lending rates averaging 36.6% and a decline in credit to the sector to N7.72 trillion as of March 2025 have further limited performance. Multinationals like Procter & Gamble, Unilever, GSK, and Kimberly-Clark have exited or scaled down, citing economic instability, high costs, and currency volatility.
CPPE says Nigeria’s manufacturing revival hinges on managing structural risks while sustaining macroeconomic stability. Yusuf calls on FG to prioritise macroeconomic stability, maintain FX market reforms, and avoid disruptive policy reversals. He also urges urgent fixes to the power sector value chain through stronger gas supply, generation, transmission and distribution, grid reliability, and full implementation of the Presidential Power Initiative. On financing, CPPE recommends empowering development finance institutions to provide lower-cost funds with longer tenors suited for manufacturing, to address “clear market failures in commercial finance”. The group also backs the “Nigeria First” procurement policy to prioritise locally made goods, noting that selective tariff reductions on industrial inputs and higher tariffs on finished imports can strengthen domestic producers.
