Nigeria’s manufacturing sector generated an impressive N1.17 trillion in Value Added Tax (VAT) revenue in 2025, representing a 45.61 percent increase from the N803.53 billion recorded the previous year. Company Income Tax (CIT) contributions also climbed significantly to N881.29 billion. However, despite these strong tax figures, industry stakeholders say the sector remains far from competitive, raising concerns about the true state of Nigeria’s productive economy in the first half of 2026.
While the government’s revenue from manufacturing continues to rise, business leaders argue that the sector’s performance does not reflect sustainable growth. Manufacturers, alongside agriculture operators and small businesses, continue to battle an environment marked by soaring production costs, inflationary pressures, insecurity, and expensive borrowing. These challenges have limited expansion, reduced productivity, and weakened the sector’s ability to compete with global markets.
A recent half-year assessment by the Centre for the Promotion of Private Enterprise (CPPE) revealed that although Nigeria experienced improved macroeconomic stability in the first six months of 2026, the gains have not translated into stronger productivity, employment growth, or improved household welfare. According to the centre, high interest rates, elevated energy costs, inadequate electricity supply, poor transportation infrastructure, and logistics bottlenecks continue to weigh heavily on businesses across the country.
The Manufacturers Association of Nigeria (MAN) expressed particular concern over the sharp decline in bank lending to the sector. Commercial credit to manufacturers reportedly fell by N1.92 trillion, dropping from N8.53 trillion in December 2024 to N6.61 trillion in December 2025. MAN warned that the combination of high borrowing costs, bureaucratic hurdles, and policy inconsistencies is making long-term investments increasingly difficult, preventing companies from upgrading technology, expanding production capacity, and creating much-needed jobs.
Adding to the concerns, the Lagos Chamber of Commerce and Industry (LCCI) identified Nigeria’s persistent power crisis as one of the biggest obstacles to industrial growth. Frequent electricity outages, rising generator expenses, and unreliable power distribution continue to increase operating costs for manufacturers. The chamber stressed that without urgent reforms in the power sector, including stronger investment in renewable energy, better grid management, and greater private-sector participation, Nigeria’s ambition of becoming a globally competitive industrial economy may remain out of reach.
source: tribune
