‘Manufacturing sector recovery fragile despite GDP growth’

The Centre for the Promotion of Private Enterprise (CPPE) has said Nigeria’s manufacturing sector recovery remains fragile despite the country recording a 3.89 per cent year-on-year GDP growth in the first quarter of 2026. In a statement issued on Wednesday, the Chief Executive Officer of CPPE, Dr. Muda Yusuf, said the latest GDP figures released […]

The Centre for the Promotion of Private Enterprise (CPPE) has said Nigeria’s manufacturing sector recovery remains fragile despite the country recording a 3.89 per cent year-on-year GDP growth in the first quarter of 2026.

In a statement issued on Wednesday, the Chief Executive Officer of CPPE, Dr. Muda Yusuf, said the latest GDP figures released by the National Bureau of Statistics reflected “continued macroeconomic stabilization, improving business confidence and the resilience of key non-oil sectors.”

According to him, although the Q1 2026 growth was slightly lower than the 4.0 per cent recorded in Q4 2025, “the moderation relative to the preceding quarter is not unusual, as first-quarter economic activities are typically softer because of seasonal and business cycle factors.”

“Overall, the economy remains on a gradual recovery path,” Yusuf stated.

He noted that the services sector remained the biggest driver of growth, contributing 57.73 per cent to GDP and expanding by 4.31 per cent.

“The ICT sector grew by 10.98 per cent, financial services expanded by 8.54 per cent, while the entertainment sector recorded 11.25 per cent growth,” he said, adding that the sectors had demonstrated “impressive resilience despite persistent structural and macroeconomic headwinds.”

The CPPE also described the emergence of the trade sector as the largest contributor to GDP at 17.89 per cent as one of the major highlights of the report.

“This reflects the positive effects of improved exchange rate stability, better FX liquidity conditions, easing inflationary pressures and recovering business confidence on commercial activities and trade flows,” Yusuf said.

However, he warned that “sustainable economic transformation cannot be driven by commerce alone,” stressing that “long-term growth resilience requires stronger productive capacity, deeper industrialization and significantly higher domestic value addition.”

Speaking on manufacturing, Yusuf said the sector recorded a modest growth of 3.29 per cent, an improvement from 1.13 per cent in Q4 2025.

He attributed the growth largely to “petroleum refining, food and beverages, cement, chemicals and pharmaceuticals.”

“Nonetheless, manufacturing contribution to GDP remains below 10 per cent, highlighting the continuing structural constraints confronting the industrial sector,” he stated.

According to him, “high energy costs, elevated interest rates, weak infrastructure, logistics bottlenecks and policy uncertainties continue to undermine industrial productivity and competitiveness.”

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

The CPPE boss also highlighted the strong performance of the refining sector, which grew by 37.46 per cent during the quarter.

“This remarkable performance underscores the transformative potential of domestic refining in advancing energy security, deepening import substitution, accelerating industrialisation and conserving foreign exchange,” he said.

Yusuf noted that the performance was “driven largely by the operations of the Dangote Refinery, whose emergence is increasingly reshaping Nigeria’s energy ecosystem.”

Despite the positive indicators, CPPE expressed concern over the sharp contraction in the electricity and gas sector, which declined by 15.30 per cent.

“The most troubling aspect of the report is the sharp contraction of the electricity/gas sector by 15.30 per cent, making it the weakest-performing sector in the quarter,” Yusuf said.

“This underscores the deepening fragility of Nigeria’s power sector and raises serious concerns about the sustainability of economic growth, industrial productivity and business competitiveness.”

He warned that deteriorating electricity supply was worsening operating conditions for businesses already struggling with high interest rates and logistics costs.

“Heavy dependence on diesel and petrol-powered self-generation continues to erode profitability across the manufacturing, SME, hospitality, agro-processing and digital sectors,” he stated.

Yusuf said the aviation and textile sectors also remained under pressure, with aviation contracting by 7.62 per cent due to “elevated aviation fuel prices, exchange rate pressures, multiple taxation, regulatory charges and high maintenance costs.”

On the oil sector, he noted that growth slowed significantly from 6.79 per cent in Q4 2025 to 2.57 per cent in Q1 2026.

“This moderation is concerning given the strategic importance of the sector to fiscal revenues, foreign exchange earnings and macroeconomic stability,” he said.

While describing the GDP figures as encouraging, Yusuf maintained that concerns remained about “the quality, inclusiveness and welfare impact of growth.”

“Economic growth must ultimately translate into improved living conditions, stronger purchasing power and better welfare outcomes for citizens,” he added.