Manufacturing Confidence Rebounds to 52.1, But Finance, Power and Forex Threaten Nigeria’s Industrial Recovery

Threaten Nigeria’s Industrial Recovery
MAN Q2 2026 Index shows cautious optimism as manufacturers demand lower interest rates, better forex access, stronger power supply and effective implementation of Made-in-Nigeria policies
Nigeria’s manufacturing sector recorded a cautious return of confidence in the second quarter of 2026, with the Manufacturers’ CEOs Confidence Index (MCCI) rising to 52.1 points from 48.7 in Q1 2026, even as manufacturers continued to grapple with restricted access to finance, high interest rates, electricity shortages, foreign-exchange constraints, rising production costs and multiple taxation.
The latest Manufacturers’ CEOs Confidence Index, Volume 30, Q2 2026, produced by the Manufacturers Association of Nigeria (MAN), indicates that the improvement in sentiment represents a significant 3.4-point quarterly increase and places the index above its 50-point benchmark, which separates confidence from lack of confidence.
However, the report makes clear that the recovery in confidence remains fragile.
Rather than reflecting a broad-based improvement in actual operating conditions, manufacturers’ optimism was driven substantially by expectations of better business conditions in the coming quarter, while current employment and business conditions remained below the confidence threshold.
The report was endorsed by Mr. Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN).
Confidence Returns, But Manufacturing Recovery Remains Fragile
According to MAN, the Q2 2026 MCCI of 52.1 represents a return of confidence among manufacturers after the index fell to 48.7 in Q1.
The report attributes the improved outlook partly to recent tax reforms, executive orders and business-related policies, including the Nigeria Industrial Policy 2025 and the “Nigeria First” Policy.
Yet the improvement should not be mistaken for a full recovery in manufacturing activity.
MAN said manufacturers remained dissatisfied with the cost and availability of credit, while high lending rates continued to weigh heavily on production decisions.
With the Monetary Policy Rate at 26.5 per cent, manufacturers argued that commercial banks were charging high interest rates on loans, thereby increasing the cost of production and restricting access to working capital.
The report also identified inadequate foreign-exchange availability, multiple taxation, port congestion and weak patronage of Nigerian-made products as continuing constraints.
Q3 Outlook More Optimistic
One of the strongest signals in the report is the improvement in manufacturers’ expectations for the third quarter.
MAN’s diffusion indicators show projected Q3 business conditions at 55.6, employment conditions at 55.2, and production conditions at 63.0.
All three are above the 50-point confidence threshold, suggesting that manufacturers expect stronger business activity, employment and production in Q3 2026.
But the optimism comes against a difficult operating environment, creating what could be described as a confidence-versus-capacity gap: manufacturers expect improvement, but their ability to translate that optimism into higher output remains constrained by finance, energy, forex and logistics.
Motor Vehicle, Wood and Textile Sectors Lead Confidence
The improvement was not evenly distributed across manufacturing subsectors.
The Motor Vehicle and Miscellaneous Assembly sector recorded the strongest confidence at 69.4, followed by Wood and Wood Products at 66.7 and Textile, Apparel and Footwear at 58.3.
Other sectors above the 50-point benchmark included Basic Metals, Iron and Steel at 54.8; Food, Beverages and Tobacco at 54.5; Domestic/Industrial Plastic and Rubber at 52.0; and Non-metallic and Mineral Products at 51.1.
However, Chemicals and Pharmaceuticals recorded 47.7, Electrical and Electronics 42.5, while Pulp, Paper, Printing, Publishing and Packaging recorded the weakest sectoral confidence at 38.6.
The divergence suggests that the recovery is highly sector-specific rather than a uniform rebound across Nigerian manufacturing.
Regional Confidence Also Uneven
The geographical picture is equally mixed.
Manufacturers in Edo/Delta recorded confidence of 66.7, followed by Kano at 63.9, Kwara/Kogi at 63.0, Oyo/Ondo/Ekiti/Osun at 60.4 and Cross River/Akwa Ibom at 60.4.
At the other end, Anambra recorded 41.7, Bauchi/Benue/Plateau 40.0 and Ikeja 47.7.
MAN reported that nine of the 13 industrial zones recorded improved confidence compared with Q1 2026, although confidence declined in Kaduna and deteriorated in some other zones.
Finance Emerges as Manufacturers’ Biggest Threat
Perhaps the most significant finding of the Q2 report is the emergence of limited access to finance as the industry’s number-one challenge, moving from sixth position in Q1 to first in Q2.
Frequent power outages remained second, inadequate foreign-exchange availability third, high interest rates fourth and low patronage fifth.
Multiple taxation, which ranked second in Q1, dropped to sixth in Q2, followed by poor infrastructure, high production costs, shortage of raw materials and unfavourable trade policies.
The financing problem is particularly significant because manufacturing requires substantial working capital to purchase raw materials, maintain inventories, pay workers, fund logistics and sustain production.
MAN’s survey found that two out of every three CEOs identified commercial-bank lending rates as a disincentive to manufacturing productivity, while manufacturers also considered the size of available bank credit inadequate.
High Interest Rates Continue to Squeeze Manufacturers
MAN’s position is that the prevailing interest-rate environment is undermining industrial expansion.
The association argues that the 26.5 per cent MPR remains too high to support affordable credit for manufacturers and recommends that the Central Bank of Nigeria reduce the MPR to below 20 per cent, particularly for credit flowing into manufacturing.
It also wants manufacturers to receive priority in foreign-exchange allocation for machinery, spare parts and critical production inputs.
Power Crisis Remains a Production Tax
Electricity shortages continue to impose a significant burden on manufacturers.
Frequent power outages ranked second among the sector’s challenges, with manufacturers reporting that inadequate electricity supply continues to undermine factory operations.
The report further notes that manufacturers are being forced to provide alternative solutions for energy, transport and logistics, increasing their operating costs and reducing capacity utilisation.
MAN is therefore calling for improved electricity provision, including measures to prevent further tariff pressures on manufacturers and to prioritise the electricity needs of industrial companies.
Multiple Taxation Persists Despite Tax Reform
The Q2 report also raises questions about the practical implementation of the Nigeria Tax Act 2025.
Although the reforms were intended partly to reduce multiple taxation and overregulation, manufacturers reported continued visits from different tax authorities demanding various taxes and levies.
According to MAN, this has created uncertainty about whether the intended benefits of the tax reforms are reaching businesses on the ground.
The association is therefore calling for a smooth implementation of the Nigeria Tax Act and an end to overlapping taxes and levies imposed on manufacturers.
Port Congestion and Weak Government Patronage
Another major concern is the persistent delay at the nation’s ports.
MAN said port gridlock continues to constrain the timely importation of production materials, while arbitrary charges on raw materials and equipment add to the cost of manufacturing.
At the same time, inadequate patronage of Nigerian-made products by Ministries, Departments and Agencies has prevented manufacturers from significantly reducing inventories.
The report argues that Executive Order 003 requires stronger enforcement and that government procurement should become a major instrument for supporting local manufacturing.
Local Sourcing Offers a Bright Spot
Despite the difficult environment, manufacturers reported improvement in local sourcing of raw materials.
The development could reduce exposure to foreign-exchange volatility and international supply-chain disruptions.
However, MAN cautioned that insecurity in some parts of the country could threaten the sustainability of this improvement.
Economist Celestine Ukpong: Confidence Must Translate Into Production
Celestine Ukpong, an economist, in an expert reading of the MAN findings, would view the rise in the MCCI as encouraging but insufficient on its own.
The key issue, from an economic-policy perspective, is whether the 52.1 confidence reading can translate into increased factory output, investment, employment and productive capacity.
The report itself shows why caution is necessary: current employment and business conditions remained below the 50-point threshold, while the strongest improvements were concentrated in expectations for the next quarter.
Ukpong’s perspective therefore underscores the need to close the gap between business confidence and actual operating capacity.
For manufacturers to convert optimism into measurable economic growth, lower-cost finance, reliable electricity, predictable taxation, accessible foreign exchange and efficient logistics must move from policy commitments into measurable improvements at factory level.
Peter Adebayo FCA: The Real Test Is Cost and Cash Flow
Peter Adebayo, FCA, would similarly place the report’s financing concerns at the centre of the manufacturing debate.
From a financial-management perspective, the critical question is not simply whether manufacturers are confident, but whether they have sufficient liquidity and affordable funding to sustain production.
The MAN report’s finding that limited access to finance moved from sixth to first among manufacturing challenges is therefore particularly important.
The combination of expensive bank credit, inadequate loan sizes, rising production and distribution costs and insufficient foreign exchange can squeeze manufacturers’ margins even when sales volumes begin to improve.
The report shows that sales volume increased in Q2, but production and distribution costs as well as shipment costs also increased, while capacity utilisation and investment remained constant.
That means the next phase of Nigeria’s industrial recovery must focus not merely on boosting demand, but on improving the financial sustainability of production.
MAN’s Nine-Point Prescription
To reverse the constraints confronting manufacturers, MAN proposed nine key interventions:
Reduce the MPR to below 20 per cent, especially for manufacturing credit.
Prioritise forex allocation for manufacturers importing machinery, spare parts and production materials.
Give stronger legal force to Executive Orders 003 and 005 supporting Made-in-Nigeria products.
Implement the Nigeria Industrial Policy and Nigeria First Policy through stronger government procurement of locally manufactured products.
End multiple taxation through effective implementation of the Nigeria Tax Act 2025.
Improve electricity supply and halt further tariff pressures affecting manufacturers.
Stop arbitrary charges and levies imposed on imported raw materials and equipment.
Support manufacturers investing in alternative energy, including gas and solar.
Strengthen the Bank of Industry’s capital base to expand credit to manufacturers.
The Ameh News View: Confidence Is Back—But the Factory Floor Has Yet to Catch Up
The Q2 2026 MCCI tells a story that policymakers should not overlook.
Nigeria’s manufacturers are becoming more hopeful, but they are not yet operating in an environment that fully supports that optimism.
The movement from 48.7 to 52.1 is important because it takes manufacturing sentiment above the MCCI’s 50-point neutrality benchmark. But the details beneath the headline are more revealing.
Current employment and business conditions remain weak. Financing is now the industry’s biggest challenge. Electricity remains unreliable. Forex availability is still inadequate. Production and distribution costs are rising. Port and logistics challenges persist. Manufacturers continue to complain about multiple taxation.
In other words, confidence has recovered faster than productive capacity.
The real policy test in Q3 and beyond will therefore be whether government can convert manufacturers’ expectations into cheaper credit, stronger capacity utilisation, higher output, increased investment and sustainable employment.
If the projected Q3 production confidence of 63.0 becomes reality, the Q2 MCCI could prove to be the beginning of a genuine manufacturing recovery.
But if finance, electricity, forex, taxation and logistics remain unresolved, the 52.1 headline could ultimately become another measure of manufacturers’ optimism about what Nigeria’s industrial future could be—rather than evidence of what factories are actually producing.
For Nigeria, the distinction matters.
A confident manufacturer is good news. A financially viable, fully powered and efficiently producing factory is better news.