Industrial production expansion accelerates to twice its pace, even as economic output share dips in first quarter of 2026

Nigeria's manufacturing sector saw a notable uptick in output during the first quarter of 2026, with year-on-year growth more than doubling to 3.29 per cent, according to data from the National Bureau of Statistics, NBS.

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This significant improvement marks a substantial increase from the 1.69 per cent growth recorded in the corresponding period of 2025, Q1'25, and represents the sector's strongest quarterly growth since the first quarter of 2022, when manufacturing expanded by 5.89 per cent.

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Despite this improved performance, the manufacturing sector's contribution to the nation's Gross Domestic Product, GDP, has declined marginally to 9.57 per cent in Q1'26 from 9.62 per cent in Q1'25, highlighting the persistent structural challenges facing the sector.

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The Manufacturers Association of Nigeria, MAN, had projected a 3.1 per cent growth rate for the sector in 2026, anticipating that its contribution to real GDP would rise to 10.2 per cent, according to its 2026 outlook, which stated "Real manufacturing growth is projected to reach 3.1 per cent, while contribution to real GDP is expected to rise to 10.2 per cent".

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While the Q1 growth performance slightly exceeded the association's annual projection, the sector's GDP contribution remained below expectations, sparking concerns over the sector's long-term prospects.

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According to the NBS report, real GDP growth in manufacturing was higher than the same quarter of 2025 and exceeded the preceding quarter by 1.60 percentage points and 2.17 percentage points, respectively, indicating a notable recovery from the preceding quarter, Q4'25, when the sector's growth stood at 1.12 per cent.

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The manufacturing sector contributed 10.08 per cent to nominal GDP in Q1'26, lower than the 10.78 per cent recorded in Q1'25 but higher than the 8.34 per cent posted in Q4'25, with nominal GDP growth in the sector rising to 10.22 per cent year-on-year.

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Analysts have attributed the improved performance to increased activities in consumer goods production, food processing, industrial materials, cement manufacturing, and other construction-related industries, which have helped drive growth in the sector.

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The cement sector, in particular, recorded a growth rate of 11.53 per cent during the period, more than double the 4.94 per cent achieved in Q1'25 and significantly above the 4.12 per cent growth posted in Q4'25, highlighting the sector's potential for growth.

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Dr. Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, CPPE, has warned that Nigeria's economy may struggle to achieve sustainable transformation without a stronger manufacturing base, citing the weak contribution of manufacturing to GDP as a key concern.

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According to Yusuf, manufacturing's contribution to GDP remains below 10 per cent, reflecting persistent challenges including high energy costs, elevated interest rates, poor infrastructure, logistics bottlenecks, and policy uncertainties, which must be addressed to drive sustainable growth.

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Yusuf emphasized that "The economy cannot achieve durable structural transformation without a stronger manufacturing base, as industrialisation remains the most sustainable pathway to large-scale job creation, export competitiveness, and inclusive growth".

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He urged policymakers to intensify efforts to address the constraints facing manufacturers, stressing that sustained industrial growth remains critical to broadening Nigeria's economic base, creating jobs, and strengthening long-term economic resilience.