Nigeria’s manufacturing sector has shown early signs of recovery, but industry experts are warning that rising production costs, expensive loans and weak consumer demand could slow down the fragile rebound if urgent action is not taken.
According to the latest Purchasing Managers’ Index (PMI) report, the manufacturing sector recorded 50.10 points in June, up slightly from 49.6 in May. While the increase signals a return to growth after months of contraction, analysts say the improvement remains too weak to guarantee a sustained recovery.
The sector had experienced strong expansion between September 2025 and March 2026, before slipping into contraction in April and May.
Speaking on the development, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, blamed the sector’s struggles on the rising cost of doing business, particularly the surge in energy prices.
“I will put it down to the fact that the cost of operations has been increasing, especially since the Iran war started. Costs of energy products—diesel, gas and others—have been going up significantly. Manufacturing is energy intensive, so rising energy costs will naturally affect performance,” Yusuf said.
He also identified high borrowing costs as another major challenge affecting manufacturers.
“Many manufacturers are still grappling with high interest rates. Development finance institutions are unable to meet the growing demand for financing because they are not adequately funded,” he added.
Yusuf, however, noted that access to foreign exchange has improved compared to previous years.
“Accessing forex is no longer a major issue because we now have liquidity in the market. Except for compliance challenges arising from documentation requirements, foreign exchange availability is no longer the problem,” he said.
The President of the Association of Food and Agro-allied Processors of Nigeria, Kuteyi Duro, also expressed concern over the worsening business environment, saying manufacturers are struggling to remain profitable.
“The cost of production is increasing daily. When diesel and petrol prices rise together, alongside raw material costs, it becomes difficult for industries to break even,” Duro said.
He further criticised aspects of government fiscal policies, including taxation and the implementation of import waivers, warning that some manufacturers may be forced to shut down if conditions fail to improve.
Meanwhile, data from the National Bureau of Statistics (NBS) showed that manufacturing contributed 9.57 per cent to Nigeria’s real Gross Domestic Product (GDP) in the first quarter of 2026, an increase from 7.40 per cent recorded in the last quarter of 2025.
Despite the improvement, analysts believe the recovery remains vulnerable because manufacturers continue to battle rising energy costs, expensive financing and weak consumer purchasing power.
They called on the government to implement policies that will reduce production costs, improve electricity supply, provide affordable financing, strengthen infrastructure and encourage local sourcing of raw materials.
Experts warned that without meaningful reforms, Nigeria’s manufacturing sector could remain under pressure, limiting its contribution to economic growth, job creation and non-oil exports.
