Manufacturing growth doubles as GDP contribution slips in Q1’26

*Weak manufacturing base threatens economic gains – CPPE

By Yinka Kolawole

Nigeria’s manufacturing sector recorded a significant improvement in output in the first quarter of 2026 (Q1’26), with growth more than doubling year-on-year. However, concerns persist over the sector’s declining contribution to the nation’s Gross Domestic Product, GDP, amid warnings that a weak industrial base could undermine long-term economic transformation.

Data released by the National Bureau of Statistics, NBS, showed that the manufacturing sector grew by 3.29 per cent year-on-year in Q1’26, compared to 1.69 per cent recorded in the corresponding period of 2025 (Q1’25).

The performance represents the sector’s strongest quarterly growth since the first quarter of 2022, when manufacturing expanded by 5.89 per cent. It also marked a notable recovery from the preceding quarter, Q4’25, when the sector’s growth stood at 1.12 per cent.

Despite the improved output, manufacturing’s contribution to real GDP declined marginally to 9.57 per cent in Q1’26 from 9.62 per cent in Q1’25, highlighting the structural challenges still confronting the sector.

The development comes as the Manufacturers Association of Nigeria, MAN, projected a 3.1 per cent growth rate for the sector in 2026 and anticipated its contribution to real GDP would rise to 10.2 per cent.

“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,” MAN had stated in its 2026 outlook.

While the Q1 growth performance slightly exceeded the association’s annual projection, the sector’s GDP contribution remained below expectations.

According to NBS, 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.

The report further showed that manufacturing 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. Nominal GDP growth in the sector rose to 10.22 per cent year-on-year, compared to 5.80 per cent in the preceding quarter.

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

Notably, the cement sector 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. 

Meanwhile, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, has warned that Nigeria’s economy may struggle to achieve sustainable transformation without a stronger manufacturing base.

In a policy brief on the Q1’26 GDP report, Yusuf identified the weak contribution of manufacturing to GDP and the contraction in electricity supply as key structural concerns.

According to him, 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.

“The economy cannot achieve durable structural transformation without a stronger manufacturing base. Industrialisation remains the most sustainable pathway to large-scale job creation, export competitiveness and inclusive growth,” Yusuf stated.

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.

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