ECONOMY: Declining manufacturing, agric sectors threaten Nigeria’s industrialisation 

…As services sector takes driving seat

··Manufacturing loses N1.2trn in 5 years —Report

•FDI plummets amid waning investors’ confidence 

•Rebasing exposes sector’s structural weakness —MAN 

•Nigeria struggling with de-industrialisation, says NESG 

•Manufacturing should contribute 40% to GDP —Ekpo 

By Yinka Kolawole

THERE is a growing concern among industry stakeholders as the gap between real and services sectors’ contributions to the economy widens in favour of the latter.

The stakeholders say the development is    consolidating the country’s  economic structural defect which subdues progress towards industrialization as the real sector is considered the bedrock of economic growth.

Available official data indicates that while the real sector, consisting mainly of manufacturing and agriculture, is entering its sixth consecutive year of decline in 2025, the services sector is on the increase.

The data shows that the manufacturing sector recorded a mere 8.8 percent average contribution to the Gross Domestic Product, GDP, between 2020 and 2024. The Agriculture sector did 25.5 percent.

In contrast, the Services sector recorded average contributions of 54.9 percent.

Available data from the National Bureau of Statistics (NBS) shows that the manufacturing sector’s contribution to the economy in 2020 stood at 8.99 percent and 8.99 percent in 2021, it declined to 8.91 percent in 2022; 8.64 percent in 2023; and 8.41 percent in 2024.

Similarly, the Agriculture sector contributed 26.21 percent in 2020 and declining to 25.88 percent in 2021; 25.58 percent in 2022; 25.18 percent in 2023; and 24.64 percent in 2024.

Comparatively, the Services sector contributed 52.44 percent to GDP in 2020 and rising to 53.56 percent in 2021; 55.40 percent in 2022; 56.18 percent in 2023; and 56.89 percent in 2024.

In the first quarter of 2025, Q1 2025, though the GDP rebasing improved manufacturing sector contribution to 9.62%, industry experts said the contribution was actually lower in real terms.

Also the improvement did not make positive impact on the widening gap as the services sector’s contribution increased further to 57.50 percent.

Worsening the position of the real sector is another decline in the Agriculture sector contribution which stood at 23.33 percent.

contributing about 55 per cent or more to the GDP, which we have to be cautious and very careful about because it is a false narrative that shows that we have arrived.”

In terms of growth trajectory, Ekpo said a country’s grows from an agriculturally dominated economy to an industrialised economy, with a strong manufacturing base before growing to a point where the service sector would lead the economy.

Sector loses N1.2trn in 5 years – Report

A report by Quartus Economics, a research company, which analysed the country’s economy, following the GDP rebasing exercise of NBS, indicated that the country’s manufacturing sector lost about N1.2 trillion between 2019 and 2023.

Acording to the report, titled, ‘Inside Nigeria’s Quiet Recovery‘, between 2019 and 2023, both the agriculture and services sectors struggled and “failed to keep pace with population growth, while manufacturing declined sharply.

“Between 2019 and 2023, agriculture grew at 11 percent and services at only 3 percent, while the manufacturing sector declined by 21 percent. Between the period, Nigeria shed over N1.2 trillion in manufacturing GDP.

“During the years of stall, more than half of Nigeria’s industry categories (26 out of 46) declined in value, while nearly 20 percent (9/46) were in slow-growth mode relative to 2019. By the end of 2024, however, only 7 industry groups remained in decline.”  

FDI plummets amid waning investors’ confidence.

Meanwhile, analysts at Proshare have highlighted significant decline in foreign direct investment (FDI) into the manufacturing sector, reflecting waning investor confidence.

“In Q1’25, FDI inflows into the sector plummeted to just $129.2 million, a sharp decline from $421 million recorded in the previous quarter, marking the lowest quarterly inflow since Q2’22, when the sector attracted a mere $98.2 million.

“The steep drop in investment reflects growing investor apprehension amid persistent structural challenges, macroeconomic instability, and policy uncertainty, further undermining the growth of the sector,” they stated.

Looking ahead, analysts said  the manufacturing sector holds strong potential to become a significant driver of Nigeria’s industrialisation agenda, adding, however, that “this potential will require deliberate and sustained efforts to address entrenched structural deficiencies, as well as prevailing macroeconomic pressures”.

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