Key Takeaways
- Manufacturers are still facing multiple taxes despite the enactment of the Nigeria Tax Act 2025.
- The recent report by the Manufacturers Association of Nigeria (MAN) illustrates the ongoing challenges within the sector.
- Local sourcing of raw materials shows slight improvement, but insecurity remains a threat.
The Manufacturers Association of Nigeria (MAN) has reported that local manufacturers are yet to benefit from significant tax relief, despite the implementation of the Nigeria Tax Act 2025. In their recently released Manufacturers CEO Confidence Index (MCCI) report for the second quarter of 2026, the association underscored that manufacturers are still confronting numerous tax collectors and regulatory bodies, adding pressure on their operations.
Segun Ajayi-Kadir, the Director-General of MAN, expressed disappointment regarding the new tax law's lack of impact. He stated, "Manufacturers complained that they were still met with multiple tax collectors and regulators in Q2 2026. It follows that the implementation of the Nigeria Tax Act 2025 is yet to achieve its objective of relieving manufacturers of the burden of taxes and levies." This situation continues to hinder the growth of the manufacturing sector.
The report highlights that the prevailing business environment in Nigeria remains precarious for manufacturers, with the only notable growth being in local sourcing of raw materials. This improvement is somewhat overshadowed by the rising insecurity in various regions, which threatens the recent gains made. The association attributed this local sourcing trend to the ongoing foreign exchange challenges, forcing many manufacturers to seek more locally available inputs.
While there was a slight uptick in sales volume during the second quarter, escalated production, distribution, and logistics costs have been detrimental to overall profitability. Furthermore, other key metrics such as capacity utilization, production rates, investment levels, and employment statistics have largely remained stagnant during this period. The report also noted that, despite recent reforms in foreign exchange policies that have stabilized the naira, a persistent shortage of foreign currency continues to be a significant barrier to manufacturing operations.
Additional challenges affecting the sector include poor infrastructure, inflated production costs, shortages of raw materials, and adverse trade regulations. The association emphasized that these findings highlight the continuous struggles of manufacturers in Nigeria, even in the face of fiscal reforms aimed at fostering a more conducive operating environment.
Why This Matters
These ongoing challenges reveal critical areas for policy improvement and underscore the urgent need for more efficient implementation of laws to support the manufacturing sector in Nigeria. As the industry navigates these hurdles, the future of manufacturing growth depends on addressing these pressing issues effectively.