GDP Report: MAN Raises Concern Over Widening Disconnect Between Macroeconomic Figures, Real-sector Vitality

• Says we must raise a critical alarm about precipitous plunge in overall industrial growth

Dike Onwuamaeze

Manufacturers Association of Nigeria (MAN) raised concerns that while headline growth suggested economic resilience, a critical analysis revealed a widening disconnect between macroeconomic figures and real-sector vitality. MAN stated this position following the recently released “Second Quarter 2026 Gross Domestic Product (GDP)”, which indicated an overall year-on-year real GDP growth rate of 4.43 per cent, up from 3.89 per cent in Q1 2026 and 4.23 per cent in Q2 2025.

It said the growth trajectory remained disproportionately service-driven, which constituted 56.62 per cent of the GDP), “while the broader industrial sector that made up 17.23 per cent of GDP is visibly suffocating under severe structural headwinds.”

MAN said, “The Q2 2026 GDP performance serves as a reminder that sustainable national prosperity must be anchored in active domestic manufacturing, not just service consumption and extraction.”

It added, “We must raise a critical alarm about the precipitous plunge in overall industrial growth, which has nearly halved, from a robust 7.46 per cent in Q2 2025 to a troubling 3.96 per cent in Q2 2026.

“This was further compounded by a drastic drop in manufacturing’s share of real GDP, which fell from 9.57 per cent in Q1 2026 to 7.72 per cent in Q2 2026, alongside a marginal decline in real manufacturing growth from 3.29 per cent to 3.24 per cent.”

MAN said the rapid industrial erosion was driven mainly by electricity, gas, steam, and air conditioning supply that recorded the sharpest contraction of -10.63 per cent in Q2 2026. 

MAN stated, “Ultimately, headline GDP growth driven by non-tradable service activities will fail to strengthen foreign exchange reserves, reduce structural inflation, or create sustainable mass industrial jobs.

“Therefore, Nigeria cannot sustain its growth momentum on services and extraction alone. A nation that trades and consumes what it does not produce builds prosperity on quicksand.”  

MAN explained that the drop in manufacturing’s contribution to GDP, from 9.57 per cent to 7.72 per cent in a single quarter, highlighted severe cost pressure, a high exchange rate, outrageous interest rates, and exorbitant electricity tariffs facing domestic manufacturers.

It said, “Although manufacturing expanded year-on-year by 3.24 per cent, its declining relative share indicates that industrial expansion is lagging behind broader economic activity.

“The Q2 2026 GDP performance serves as a reminder that sustainable national prosperity must be anchored in active domestic manufacturing, not just service consumption and extraction.”

According to MAN, a disaggregated view of the manufacturing sub-sector reveals a clear structural divergence where growth is concentrated in capital-intensive and heavy industrial segments, notably oil refining, +43.94 and cement, +12.75.

MAN said high-employment sub-sectors were either stalling or contracting.

For instance, textile, apparel and footwear, which accounted for 22.95 per cent of manufacturing real GDP, contracted by -1.23 per cent and motor vehicles and assembly also contracted by -1.02 per cent.

“Meanwhile, the largest manufacturing group, Food, Beverage and Tobacco (36.58 per cent share), grew modestly by 2.79 per cent, weighed down by weak consumer purchasing power and food inflation,” the association said.

MAN also highlighted the major effects of the poor showing of the manufacturing sector on the economy to include employment fragility as “contraction in labour-intensive sectors like textiles and vehicle assembly directly threatens wage employment and risks triggering job losses across lower- and middle-income demographics”.

It said other effects were inflationary spiral, foreign exchange (FX) vulnerability, erosion of industrial capacity, and technological obsolescence.

It stated, “Without an expanding export-oriented manufacturing base, foreign exchange inflows will remain bound to volatile primary commodity exports, perpetuating pressure on the Naira.

“Suffocating under exorbitant energy tariffs and prohibitive borrowing costs, manufacturers, particularly small and medium industries, are operating far below installed capacity. Instead of expanding production lines or acquiring modern technology, most factories are fighting to keep the lights on, leaving Nigerian industries less competitive globally.”

MAN recommended that to halt the industrial erosion, pivot the economy away from import dependency, and unlock sustainable real-sector expansion, government should direct the Nigerian Electricity Regulatory Commission to immediately approve eligible customer status for contiguous industrial clusters, and allow direct bulk Power Purchase Agreements (PPAs) with GenCos to bypass DisCo inefficiencies and eliminate arbitrary charges.

It also recommended the establishment of a matching-grant facility via the Bank of Industry to de-risk upfront capital expenditure for manufacturers deploying captive solar PV and battery storage systems.

MAN called for targeted monetary and FX interventions that would de-risk commercial bank lending and force down interest rates for the manufacturing sector.

It advised, “Create a prioritised, transparent FX clearance window within the official market specifically for raw material and capital machinery import backed by Letters of Credit (LCs).” 

MAN also urged government to pass the Nigeria Industrial Policy 2025 as an Act of Parliament to make targets and incentives legally binding and prevent arbitrary changes or abandonment by future administrations.

It added, “Enact a Local Patronage Compliance Act requiring all MDAs to grant Nigerian manufacturers the right of first refusal in procurement, mandating a temporary ‘Certificate of Non-Availability’ from MAN (through Federal Ministry of Industry, Trade and Investment before any foreign purchase.”