Nigeria’s manufacturing sector stagnates at 9–10% of GDP after 26 years of Democracy – CPPE

By Precious Mark

Nigeria’s manufacturing sector has remained largely stagnant, contributing about 9% to 10% of Gross Domestic Product (GDP) over the past 26 years, despite several rounds of policy reforms and industrialisation initiatives, according to a report released by the Centre for the Promotion of Private Enterprise (CPPE).

The report, issued on Thursday is titled “Manufacturing Under Democracy: A Story of Resilience Amid Structural Adversity.” It was signed by Muda Yusuf, the Executive Director of CPPE, and takes a review of Nigeria’s industrial performance since the return to democratic rule in 1999.

It said the sector’s weak growth reflects a lack of meaningful industrial transformation despite decades of policy pronouncements.

“The sector’s contribution to GDP has hovered around 9–10 per cent for most of the period, underscoring the absence of a decisive industrial transformation despite successive policy pronouncements,” the report stated.

The CPPE noted that Nigeria’s industrial base has steadily weakened, with several key sectors collapsing over time.

It listed the textile industry, tyre manufacturing, battery production, and automobile assembly plants as some of the major casualties of industrial decline.

“Textile mills that once employed hundreds of thousands of Nigerians have largely disappeared. The tyre industry collapsed. Battery manufacturing faded. Automobile assembly plants lost momentum,” the report said.

The report also described the collapse of Nigeria’s public refineries as a major setback, saying they had become symbols of policy failure and weak governance.

Despite the downturn, the report identified some areas of resilience, particularly the cement industry and parts of the food and beverage sector, which have continued to grow.

It also highlighted the emergence of the Dangote Refinery as one of the most significant industrial projects in recent years, describing it as a major private-sector-led investment in domestic refining capacity.

According to the report, many surviving manufacturers have remained in business largely due to private sector resilience rather than favourable policy conditions.

The CPPE identified major structural challenges affecting the sector, including unreliable electricity supply, high logistics costs caused by weak rail infrastructure, and expensive credit.

It noted that interest rates for manufacturers often range between 25% and 30% making long-term industrial investment difficult.

“Manufacturers are compelled to self-generate power at enormous cost,” the report stated, adding that high borrowing costs remain a major constraint to expansion.

The report also criticised policy inconsistency and weak enforcement of trade regulations, saying these have exposed local industries to unfair competition from imports and smuggling.

It raised concern over the increasing dominance of foreign-owned manufacturing firms, particularly from Asia, warning that it could weaken domestic industrial capacity if not balanced with stronger local participation.

The report noted that on recent reforms, CPPE acknowledged improvements in foreign exchange liquidity, adding that the 2022–2023 FX crisis had previously disrupted production and constrained imports of raw materials.

It also commended government import duty concessions on raw materials, machinery, and intermediate goods, with tariff rates ranging between 0 and 10% describing the policy as a boost to competitiveness.

The report called for urgent reforms in power supply, rail and logistics infrastructure, access to long-term financing, local content enforcement, and security improvements to strengthen industrial growth.

It concluded that Nigeria’s economic future depends on a shift from import dependence to production-led growth, stressing that manufacturing remains central to job creation, economic sovereignty, and long-term national prosperity.