Report: Manufacturing Remains Largest Contributor to Nigeria’s Industrial Output, Employment
Dike Onwuamaeze
A report released by the Nigerian Economic Summit Group (NESG) has stated that the manufacturing sector has grown to become the largest contributor to industrial output, with its share rising significantly to 50.1 per cent in the first quarter of 2026 from 28.2 percent in 2010.
The report, titled, “H1-2026 State of the Economy, Turning Potentials into Progress: Accelerating Nigeria’s Industrialisation for Economic Transformation and Inclusion,” stated that manufacturing has continued to lead in job creation within the industrial sector, accounting for 76.5 percent of total industrial employment in 2023, up from 73.2 per cent in 2017.
The Nigerian industrial sector is comprised of five broad subsectors, namely manufacturing, construction, electricity supply, water supply and mining and quarrying that is made up of oil and gas and other mining activities.
The report said that construction and oil & gas came next to manufacturing as largest contributors by accounting for 23.8 per cent and 21.1 per cent of industrial output, respectively, in 2025.
It stated further that construction was the second-largest employer within the industrial sector even though it recorded a decline in its employment share from 23.6 per cent to 21.1 per cent over the same period, while the remaining subsectors together contributed only 2.5 per cent to the total industrial employment in Nigeria in 2023.
NESG said: “This concentration of industrial output and employment highlights the need for Nigeria to prioritise manufacturing-led structural transformation, consistent with the experience of successful industrialised economies including China, South Korea, and Vietnam.
“Manufacturing growth strengthened in Q1-2026 following several quarters of subdued performance, driven largely by a few dominant subsectors. The manufacturing sector recorded quarterly growth of less than 2.0 per cent throughout 2024 and 2025. However, performance improved markedly in Q1-2026, with growth accelerating to 3.3 per cent.”
The report, however, noted that despite this rebound in manufacturing output, its contribution to real GDP remained below 10.0 per cent throughout the period under review, which underscored the sector’s relatively small contribution to aggregate output.
“This weak contribution mirrors the sector’s persistently low capacity utilisation, which has consistently remained below 60 percent over the review period, as well as sluggish productivity growth, estimated at 0.4 per cent in 2024,” the report said.
It added that the sector’s limited competitiveness was reflected weak manufacturing exports and share of intra-African trade.
“The share of manufactured goods in Nigeria’s total exports increased steadily to 4.3 per cent in Q3-2025 before falling sharply to 1.4 per cent in Q1-2026.
“Similarly, manufactured goods accounted for only a marginal share of Nigeria’s intra-African trade, dropping from 2.0 per cent in Q3-2025 to 0.9 per cent in Q1-2026. These trends underscore the country’s limited participation
in regional and global manufacturing value chains and its continued reliance on primary commodity exports,” the report said.
The NESG said that the consequence of the country’s weak manufacturing competitiveness is that Nigeria would be unlikely to fully harness the opportunities presented by the African Continental Free Trade Area (AfCFTA) unless it accelerates the development of a competitive manufacturing sector.
“Achieving this will require reducing dependence on crude oil exports, expanding domestic value addition, and promoting manufacturing-led non-oil exports to diversify export markets, strengthen foreign exchange earnings, and create more resilient and sustainable sources of economic growth,” the report said.
The report also said that the inadequate funding of the manufacturing sector has constrained its capacity for expansion and job creation.
According to the report, “the sector’s share of total bank credit fell steadily from 12.2 per cent in H1-2025 to 8.3 per cent in H1-2026.
“Limited access to finance continues to be a major constraint confronting many manufacturing firms, driven by high borrowing costs, elevated investment uncertainty, weak loan recovery and contract enforcement mechanisms, and fragmented credit information systems that hinder effective assessment of borrowers’ creditworthiness.”
It highlighted that in addition to limited domestic financing, the sector attracted only a small share of foreign investment, accounting for just 1.5 per cent of the total inflows in Q1-2026, down from 2.3 percent in Q1 2025 and its 2025 peak of 4.8 per cent in Q4.
“This persistent financing gap underscores the need for targeted measures to improve access to affordable long-term finance, strengthen the credit system, and enhance the investment climate to support the productive sectors,” NESG said.