H1, 2026: Manufacturing remains uncompetitive, despite N1.17trn VAT contribution in 2025

•CPPE demands deeper reforms •Why sector will remain uncompetitive —MAN
•Without urgent power sector reforms no industrialisation can be achieved —LCCI

Despite contributing a total of N1.17 trillion in Value Added Tax (VAT) in 2025, marking an increase of 45.61 percent over the N803.53billion in 2024, the nation’s manufacturing sector still remained largely uncompetitive in the first half of the year.

For instance, while the sector’s Company Income Tax (CIT) also rose to N881.29billion, marking a 32.83 percent increase from N663.46billion recorded in 2024, operators and business analysts still believed the sector, just like Agriculture and Micro, Small and Medium Enterprises (MSMEs), underperformed in the period under review.

They also believed the situation might not change for some time to come until some of the challenges facing the sectors, especially manufacturing, were urgently addressed.

They argued that several factors such as: insecurity, inflation, hostile operating environment, high cost of lending, erratic power supply, poor transport infrastructure, and logistics inefficiency, among others, would continue to undermine the sectors and deprive them of their much-needed growth.

For instance, in its half-year review, the Centre for the Promotion of Private Enterprise (CPPE) noted that though there were encouraging developments, the real economy remained under considerable pressure in the first half of 2026.

According to the centre, high interest rates continued to constrain private-sector investment and access to credit, while elevated energy costs, inadequate electricity supply, logistics inefficiencies and weak transport infrastructure sustained a high-cost operating environment.

It noted that the macroeconomic stabilisation recorded during the period failed to lead to significant, broad-based improvements in productivity, competitiveness, employment and household welfare.

“Businesses continue to grapple with elevated production costs and structural bottlenecks. Overall, H1 2026 was characterised by stronger macroeconomic stability, but only modest improvements in real-sector performance and household welfare, underscoring the need for deeper structural reforms,” it added.

The centre, therefore, called for a deeper reform that would convert the macroeconomic gains into inclusive, investment-driven growth.

Also speaking on the development, the Manufacturers Association of Nigeria (MAN) noted that the sector would remain uncompetitive without sustainable and growing financial foundations.

It argued that the reduction in credit access, as being presently experienced in the sector, would further limit capacity utilization, stall technological upgrades and hinder job creation in the sector.

The association described the N1.92 trillion, from N8.53 trillion in December 2024 to N6.61 trillion in December 2025, a 22.5 percent drop, of commercial bank lending to the sector as rooted in a toxic combination of prohibitive interest rates, structural bureaucracy, and policy misalignment.

It therefore warned that long-term capital investments would remain unviable, with commercial costs remaining actively hostile.

The association also warned that starving factories of affordable credit would continue to block technology upgrades and prevent operators from maintaining optimal capacity utilisation or expanding local manufacturing plants.

Also speaking on the development, the Lagos Chamber of Commerce and Industry (LCCI)  identified the poor state of power supply as one of the greatest impediments to the nation’s manufacturing.

The chamber argued that frequent outages, high generator costs, and unreliable distribution networks have continued to cripple productivity and raise the costs of doing business in the sector.

He noted that the country’s dream of being one of the highly industrialised countries in the world would always remain a mirage if some critical challenges facing the sector were not fully dealt with.

“Without urgent reforms in the power sector, Nigeria cannot achieve meaningful industrialisation. We recommend accelerated investment in renewable energy, improved grid management, and greater private-sector participation to unlock greater efficiency and reliability,” it stated.