KEY POINTS

• Nigeria’s manufacturing sector contributed 8.05 percent to real GDP in 2025, down from 8.24 percent in 2024.
• Despite the declining share, the sector grew 1.41 percent in real terms, up from 1.20 percent in 2024.
• FX liberalisation, rising production costs, and weak consumer demand are driving the sector’s shrinking weight.

Nigeria’s manufacturing sector managed to grow in 2025, yet still lost ground in the broader economy, a contradiction that NBS data released Monday lays bare and that analysts say reflects how deeply structural the sector’s challenges remain.

According to the National Bureau of Statistics, manufacturing contributed 8.05 percent to real GDP in 2025, down from 8.24 percent in 2024. Moreover, the fourth quarter told a similar story, with the sector’s real GDP share falling to 7.40 percent from 7.62 percent in the same period a year earlier. In nominal terms, the Nigeria manufacturing GDP contribution also declined, standing at 8.46 percent for the full year compared with 8.85 percent in 2024.

Structural costs squeezing manufacturers

Despite those contracting shares, the sector did record measurable output growth. Real manufacturing GDP expanded 1.41 percent in 2025, an improvement from 1.20 percent the previous year. Furthermore, on a quarter-on-quarter basis, the sector posted a notably stronger 9.01 percent jump in the fourth quarter of 2025. Nevertheless, the year-on-year expansion of just 1.13 percent in that final quarter remained subdued, indicating that even where momentum existed, it was insufficient to lift the sector’s weight in the overall economy.

Analysts say the divergence between growth and contribution reflects problems that go beyond the business cycle. Former NACCIMA President Dele Oye described the contraction as worrisome, specifically because manufacturing underpins job creation and industrial development in ways that other sectors cannot easily replicate.

Oye pointed to a cluster of interlocking pressures: persistent shortfalls in the availability and cost of raw materials, the ongoing burden of energy costs through both electricity and fuel, foreign exchange constraints, and weakening consumer purchasing power driven by high inflation. Taken together, those factors have prevented manufacturers from expanding their footprint even in years when they manage to grow output.

FX policy draws specific criticism

Beyond those structural issues, NECA Director-General Adewale-Smatt Oyerinde singled out the government’s foreign exchange liberalisation policy as a particularly damaging factor. He argued that the policy, while theoretically market-oriented, is ill-suited to an economy and business environment that depends heavily on imported raw materials and machinery.

Consequently, the FX reform has pushed up borrowing costs alongside import prices, resulting in what Oyerinde described as a direct hit on sales and profitability for manufacturers. As a result, even firms that kept their operations running in 2025 found it harder to reinvest, expand capacity, or compete on price in a market where consumers have significantly less to spend than they did a year ago.

Finally, for the Nigeria manufacturing GDP contribution to recover meaningfully, industry leaders argue, the government must address those cost pressures directly rather than rely on output growth alone to do the job.