Key Takeaways
- Manufacturers' confidence in Nigeria's business environment rebounded in Q2'26
- Expectations of improved government policies and a favourable operating climate drove the confidence rebound
- High borrowing costs, inadequate power supply, and multiple taxation remain significant challenges
Nigeria's manufacturing sector has seen a rebound in confidence, with the Manufacturers CEO Confidence Index (MCCI) rising to 521 points in Q2'26, up from 48.7 points in Q1'26. This increase in the MCCI reflects manufacturers' optimism about the direction of government reforms, rather than any significant improvement in current operating conditions.
According to the Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, the improvement is driven by expectations that recent policy initiatives will improve the operating environment. However, he noted that the optimism remains fragile, as manufacturers continue to face severe operational challenges, including limited access to finance, persistent electricity shortages, and high production costs.
Challenges Facing Manufacturers
Ajayi-Kadir listed several major constraints confronting manufacturers, including limited access to finance, persistent electricity shortages, high production costs, inadequate foreign exchange availability, weak consumer demand, and multiple taxation. He also expressed concern over the high cost of bank credit, attributed to the Central Bank of Nigeria's Monetary Policy Rate (MPR) of 26.5 per cent.
Furthermore, the implementation of the Nigeria Tax Act 2025 has not yet provided the full benefits of reforms aimed at reducing multiple taxation and easing regulatory burdens. While local sourcing of raw materials has improved, government ministries, departments, and agencies are yet to substantially increase patronage of Made-in-Nigeria products as envisaged under the 'Nigeria First' policy.
Call to Action
Ajayi-Kadir urged the Federal Government to ensure strict compliance with the directive requiring MDAs to source at least 80 per cent of their procurement locally. He also called on the Central Bank of Nigeria to reduce the MPR to below 20 per cent and prioritise foreign exchange allocation to manufacturers to stimulate production and accelerate industrial growth.
Why This Matters
The rebound in manufacturers' confidence in Nigeria's business environment is a positive sign, but the ongoing operational challenges facing the sector must be addressed to sustain growth and development. By implementing policies that support manufacturers and improve the business environment, the government can help unlock the sector's potential and drive economic growth.