Manufacturing Dominates Nigeria's Industrial Output and Employment, Report Finds

Manufacturing has solidified its position as the dominant force in Nigeria's industrial landscape, accounting for over half of the sector's output in the first quarter of 2026 and significantly leading in job creation. A report by the Nigerian Economic Summit Group (NESG) reveals that manufacturing's share of industrial output rose to 50.1% in early 2026, a substantial increase from 28.2% in 2010.

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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.

Within the industrial sector, which also includes construction, electricity, water supply, and mining, manufacturing employed 76.5% of the workforce in 2023. Construction and oil & gas followed as the next largest contributors to industrial output, but manufacturing's lead in employment remains substantial. The report highlights that construction, while second in employment share, saw a decline in its contribution over the same period.

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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.

While manufacturing growth accelerated to 3.3% in Q1 2026 after a period of slower performance, its overall contribution to Nigeria's real Gross Domestic Product (GDP) has stayed below 10%. This disparity is attributed to persistent issues of low capacity utilization, which has remained under 60%, and slow productivity growth, estimated at just 0.4% in 2024.

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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 emphasizes the need for Nigeria to prioritize a manufacturing-led structural transformation, drawing lessons from economies like China, South Korea, and Vietnam that have successfully industrialized. The sector's limited global competitiveness is further evidenced by its weak export performance and marginal share in intra-African trade, which saw sharp declines in early 2026.

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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.