Nigeria’s manufacturing sector is entering 2026 with renewed hope, following a modest recovery recorded in the second half of 2025. Industry players believe the worst may be over, but they are also clear-eyed about what lies ahead: real growth will only happen if government policies are consistent and reforms are properly implemented, not just announced.
This cautious optimism is built on several positive signals — improving macroeconomic stability, better execution of incentives under the new tax laws taking effect from January 1, favourable oil prices, rising foreign capital inflows, relatively stable energy costs, and stronger alignment of industrial and fiscal policies aimed at boosting local production.
The Manufacturers Association of Nigeria (MAN) believes these factors could push the sector forward if handled correctly. According to MAN’s Director of Research and Economic Policy, Dr Oluwasegun Osidipe, the manufacturing sector is projected to grow by 3.1 percent in real terms in 2026, contributing about 10.2 percent to Nigeria’s real GDP. However, he stressed that these gains depend heavily on how well the new tax incentives are executed.
Osidipe explained that the naira is expected to strengthen to between ₦1,300 and ₦1,400 to the dollar, supported by improved oil prices, stronger external reserves, better export earnings, foreign investments, and remittance inflows. Inflation is also projected to ease to around 14 percent, driven by lower food prices, stable energy costs, and a firmer exchange rate.
He added that the Central Bank of Nigeria may cut interest rates further to about 23 percent, in line with the slowing inflation trend, which would help expand credit and boost output. Reduced lending rates and the completion of bank recapitalisation are also expected to improve access to finance for manufacturers, supporting investment and higher capacity utilisation.
One major relief for manufacturers, Osidipe noted, is the gradual removal of multiple taxation. He recalled how moving goods across Nigeria’s 774 local governments often came with endless levies for loading, offloading, and transit. Under the new tax regime, many of these charges have been scrapped, freeing up cash for businesses.
Government stimulus packages are also beginning to show impact. Access to single-digit interest loans under the ₦75 billion industrial support fund helped capacity utilisation rise to 61.3 percent in the first half of 2025, up from 57.6 percent in late 2024. According to Osidipe, cheaper credit means manufacturers can produce more, employ more workers, and increase sales.
He also called for stronger government patronage of locally made goods, citing Cross River State’s decision to source vehicles from Nigerian manufacturers. If more states follow that example, he said, production levels across the sector would rise significantly.
Sharing a similar view, Managing Director of Coleman Technical Industries and Chairman of MAN Ogun State, George Onafowokan, described 2025 as a year of recovery and stabilisation. He said the relative stability of the naira and the gradual decline in inflation have created a better environment for manufacturers to plan and expand.
Onafowokan believes the current economic growth rate of about 3.4 to 3.9 percent provides a solid base for stronger performance in 2026. However, he warned that progress could stall if the federal government fails to finalise and implement key fiscal policies that have been pending since 2023. He also pointed to capital spending, infrastructure development, and improved security as critical drivers for sustained growth.
From a broader economic perspective, the CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, described the 2026 outlook as one of cautious optimism. He expects GDP growth to range between 4.0 and 4.5 percent if reform momentum continues, inflation eases further, and non-oil sectors perform better.
Yusuf, however, warned that serious risks remain. Insecurity continues to disrupt agriculture and logistics, high energy and transport costs still hurt productivity, and heavy debt servicing — estimated at over ₦15 trillion in the 2026 budget — limits government spending power. He also noted that geopolitical tensions, oil price shocks, pre-election uncertainties, and resistance to tax reforms could undermine progress.
Despite these challenges, the President of the Lagos Chamber of Commerce and Industry (LCCI), Engr. Leye Kupoluyi, believes 2026 could be the year businesses finally feel the impact of reforms. He described 2025 as a turning point from crisis management to cautious stabilisation and said the focus must now shift to translating reforms into real prosperity.
Kupoluyi emphasised the need to boost credit to the private sector, improve security, expand infrastructure, and ensure inclusive growth. With disciplined policy execution, he said, 2026 could mark the moment when economic reforms begin to deliver tangible benefits to businesses and households across Nigeria.
