Nigeria’s manufacturing sector is heading into 2026 with cautious optimism, according to the Manufacturers Association of Nigeria (MAN), as moderating inflation, relative exchange rate stability and improving policy signals begin to reshape business expectations after years of macroeconomic strain.
In its latest Manufacturing State of Affairs (MSA) report, which captures the sector’s outlook for 2026, MAN noted that while manufacturers are not yet out of the woods, conditions appear more supportive than in previous years marked by surging costs, currency volatility and tight credit.
MAN: Gradual Exit From Survival Mode
MAN’s assessment shows that headline inflation is projected to decelerate further to around 14 percent in 2026, driven by easing food prices, more stable energy costs and a firmer naira. The association said this trend is already improving planning confidence among manufacturers, many of whom had been operating in survival mode.
According to MAN data, capacity utilisation in the sector has shown modest improvement, rising steadily since mid-2025, while the Manufacturers’ Confidence Index (MCCI) recorded consecutive quarterly increases from Q2 2025, signalling a slow but steady recovery in sentiment.
“The stabilization phase appears to be taking hold,” MAN stated, “but the sustainability of this recovery depends on consistent policy execution and improved access to affordable finance.”
Monetary Policy: Relief, But Not Yet Enough
The association welcomed the Central Bank of Nigeria’s (CBN) recent interest rate cut, describing it as a positive signal of a gradual shift from aggressive inflation control to growth support. MAN projects that the Monetary Policy Rate (MPR) could ease further to around 23 percent in 2026, creating room for cheaper credit. However, manufacturers insist that marginal rate cuts will not be sufficient.
Economist Celestine Ukpong said MAN’s position reflects the reality on the factory floor. “Inflation coming down changes expectations, but without a meaningful reduction in lending rates, production will remain constrained,” he noted.
“Manufacturers need policy consistency and credit that supports expansion, not just working capital survival.”
Credit Expansion and Bank Recapitalisation
MAN identified improved credit availability as a key driver of growth in 2026, pointing to two major developments: lower benchmark rates and the ongoing bank recapitalisation exercise. The association believes stronger bank balance sheets will enhance lending to the real sector and support capital investment.
Chartered accountant and financial analyst Peter Adebayo, FCA, said recapitalisation could be a turning point if properly aligned with industrial financing.
“Stronger banks are good, but the real benefit comes when manufacturers can access long-term, reasonably priced loans,” Adebayo said. “Without that link, recapitalisation will not translate into industrial growth.”
Growth Projections and Sector Contribution
Based on MAN’s outlook and macroeconomic assumptions, real GDP growth is projected at about 4 percent in 2026, with manufacturing contributing approximately 10.2 percent to GDP, up from previous years. Real sector growth is forecast at around 3.1 percent, supported by better credit conditions, improved fiscal space and gradual recovery in oil production.
However, MAN cautioned that these projections are conditional on effective execution of reforms embedded in the new tax laws, the full rollout of the National Single Window Project, and the implementation of the Nigeria Industrial Policy in alignment with the Federal Government’s “Nigeria First” agenda.
Exchange Rate Stability Still the Anchor
MAN emphasised that exchange rate stability remains the single most important factor for sustained manufacturing recovery. The naira is projected to trade between ₦1,300 and ₦1,400 per dollar in 2026, supported by improved oil receipts, stronger external reserves, export growth, increased foreign investment inflows and higher diaspora remittances.
The association warned, however, that a decline in oil production—such as those recorded in parts of 2025—poses a major risk to currency stability. While global oil prices are external, MAN stressed that production volumes are a domestic responsibility.
To safeguard gains, manufacturers called for improved pipeline security, operational efficiency in the oil sector and sustained progress in domestic refining.
From Policy Blueprints to Factory Floors
On the fiscal side, MAN urged the government to move the Nigeria Industrial Policy from blueprint to full execution, stressing that alignment between trade policy, tax incentives, infrastructure planning and power supply will determine whether manufacturing can drive inclusive growth.
Ukpong noted that manufacturers are watching implementation closely.
“Policy announcements are no longer enough,” he said. “What matters in 2026 is delivery, on power, logistics, taxation and foreign exchange.”
2026: Turning Stabilisation Into Acceleration
As 2026 approaches, MAN believes Nigeria stands at a critical transition point. Inflation is easing, the naira is firmer, confidence indicators are improving and monetary authorities appear ready to pivot. Yet, the association warned that the next phase will demand tighter policy coordination, bolder credit reforms and sustained focus on productivity. “The sector may be leaving stabilization behind,” Adebayo said, “but the real test is whether Nigeria can convert macroeconomic calm into accelerated, broad-based manufacturing growth.”
Nigeria’s manufacturers head into 2026 with cautious optimism, says MAN’s Manufacturing State of Affairs report, as inflation eases, the naira stabilises and policy reforms signal a shift from recovery to growth.
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