Nigeria’s manufacturing sector is set for a comeback in 2026, with manufacturers optimistic about ongoing economic reforms and improved prospects.
Manufacturers based their optimism on naira stability and sustained economic reforms, which they say would unlock stronger growth for businesses in 2026.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), said that the improving macroeconomic fundamentals are expected to support better manufacturing outcomes in 2026, especially for firms that are backward integrated and better aligned with domestic input sourcing.
“Given the import-dependent nature of Nigerian manufacturing, FX stability alone offers meaningful relief on input costs and planning certainty,” he said.
However, he warned that without addressing structural risks such as inadequate and costly infrastructure – particularly power and logistics, port inefficiencies and supply chain bottlenecks – the country’s manufacturing will remain uncompetitive in 2026 despite the ongoing reforms.
Yusuf noted that the challenges confronting Nigeria’s manufacturing sector have remained largely unchanged over the years, saying “they are predominantly structural, not cyclical, and therefore require medium to long-term solutions rather than quick fixes.”
The Manufacturers Association of Nigeria (MAN) forecasts that the country’s manufacturing sector will grow by 3.1 percent in 2026, underscoring renewed optimism in the domestic manufacturing outlook.
“Real manufacturing growth is projected to reach 3.1 percent while contribution to real GDP is expected to rise to 10.2 percent,” MAN said in its outlook for 2026.
“The rationale for these projections is hinged on the ongoing reforms of government, particularly the incentives being channelled to the manufacturing sector through new tax laws, regulatory adjustments, and the operationalisation of the National Council on Industry and other policy frameworks,” MAN noted.
The manufacturing association projected that gains would depend largely on the execution of incentives under the new tax laws, the operationalisation of the National Single Window Project and the purposeful implementation of the Nigeria Industrial Policy in alignment with the Nigeria First policy framework.
The sector recorded a stronger year-on-year performance as it grew by 1.25 percent in the third quarter (Q3) of 2025 compared to 0.8 percent in the same period of 2024.
Activities in the sector in 2025 closed on a solid footing as strong demand drove sharp increases in output and new orders, while business confidence climbed to a six-month high, according to the December Stanbic IBTC Purchasing Managers Index (PMI).
The PMI stood at 53.5 last month, marking the 13th consecutive month of improving business conditions, reflecting a sustained momentum across the economy.
George Onafowokan, managing director of Coleman Technical Industries Limited, predicted a stable manufacturing growth in 2026 amid policy uncertainty.
Onafowokan said manufacturers have benefited from improved macroeconomic stability, including relative naira stability, easing inflation and steady economic growth, noting that they can now plan and make projections for the year.
Looking ahead to 2026, which coincides with a pre-election year, he expressed cautious optimism, citing positive budgetary signals, particularly increased capital expenditure, exchange rate stability and the prospect of easing interest rates.
“We see a positive growth outlook. There is growing domestic investment, renewed foreign direct investment, infrastructure development and opportunities,” he said.
Nigeria’s headline inflation rate eased for the eighth consecutive month in November to 14.45 percent, with food inflation closing at 11.08 percent. The lowering inflation offers relief for households and businesses and a possibility of the central bank’s interest rate cut in the 2026 Monetary Policy Meeting.
Segun Ajayi-Kadir, director general of MAN, while expressing optimism in the 50-basis point reduction in Monetary Policy Rate (MPR) by the apex bank last October, said lower inflation would pave the way for deeper cuts in lending rates to boost the struggling manufacturing sector in the country.
“With recent reforms moderating inflation, stabilising the exchange rate, and improving investor confidence, the timing is right for the central bank to gradually relax rates,” he said.
“We are definitely looking forward to further reduction. If you give a manufacturer anything more than 5 percent to pay as interest, competitiveness is compromised, as our rivals are borrowing at much lower rates,” he added.
Kadir reiterated the need for a special financing window for manufacturers to enable them access loans at rates below the MPR.
