Manufacturing Economy Inches Up to N4.13trn as Bosses Turn Optimistic, but Crippling Energy and Loan Costs Threaten Fragile Rebound

Nigeria’s manufacturing sector expanded to ₦4.128 trillion in the second quarter of the year, posting a modest 3.3 percent year-on-year increase as business confidence among industrial operators recovered from historic lows.

Data released by the National Bureau of Statistics (NBS) showed that real manufacturing growth settled at 3.24 percent, an improvement compared to the ₦3.998 trillion recorded during the same period in the previous year. The upward movement coincided with renewed optimism across factory floors, reflected in the latest Manufacturers’ CEOs Confidence Index (MCCI) by the Manufacturers Association of Nigeria (MAN). The index climbed to 52.1 points from 48.7 points, crossing the benchmark threshold that divides industrial pessimism from business expansion.

However, the headline improvement masks underlying vulnerabilities within the nation’s industrial heartland. On a quarter-on-quarter basis, manufacturing performance suffered a steep 15.9 percent contraction compared to the ₦4.906 trillion achieved in the first quarter. The sequential drop dragged the sector’s overall contribution to national GDP down to 7.72 percent, underscoring the deep operating pressures confronting local producers.

A closer look at the data shows that the expansion was heavily driven by heavy industry rather than broad-based factory activity. The domestic petroleum refining sub-sector recorded a notable 43.94 percent surge, lifting overall manufacturing figures. In contrast, consumer-facing segments grew at a much slower pace: the food, beverage, and tobacco segment rose by 2.79 percent, non-metallic mineral products expanded by 2.17 percent, and electrical equipment crept up by 1.51 percent.

MAN Director-General Segun Ajayi-Kadir cautioned against premature celebration, noting that the broader industrial landscape remains under strain. He pointed out that overall industrial growth nearly halved to 3.96 percent from the 7.46 percent recorded a year earlier, reiterating that true economic stability requires sustained domestic manufacturing rather than reliance on retail trade and extraction.

Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), described the 3.24 percent real growth as a sign of factory resilience given unrelenting energy, financing, and transport bottlenecks. He noted that while growth in primary manufacturing segments moderated, the positive trajectory shows that output could jump rapidly if the government delivers targeted structural relief.

Taking a more cautious view, the President of the Association of Small Business Owners of Nigeria (ASBON), Dr. Femi Egbesola, warned that current production levels remain too weak to drive substantial job creation. Egbesola stressed that micro, small, and medium-scale manufacturers are still contending with steep electricity bills, currency fluctuations, double-digit borrowing rates, multiple taxes, and low consumer demand.

Financial market analysts, however, maintain that manufacturing could provide stronger momentum for the wider economy through the second half of the year. Recent Purchasing Managers’ Index (PMI) readings rose to 54.3, reflecting continuous private-sector expansion supported by new product introductions and improved material availability. Analysts maintain that sustaining this momentum will depend on the government addressing electricity reliability, stabilizing credit markets, and reducing logistical costs along major trade corridors.