Follow Us on Google
By Merit Ibe
The Centre for the Promotion of Private Enterprise (CPPE) has said the revival of Nigeria’s manufacturing sector depends largely on effectively managing long-standing structural risks while sustaining macroeconomic stability.
In its policy brief titled “Manufacturing Sector: Outlook, Risks and Policy Priorities (2026) – Overview”, the Centre noted that the challenges facing the sector have remained largely unchanged over the years and are predominantly structural rather than cyclical. It stressed that addressing these issues requires medium- to long-term solutions, not short-term fixes.
According to CPPE, effective implementation of reforms in the power sector, trade policy and development finance would significantly enhance the sector’s growth prospects and competitiveness in 2026 and beyond. It warned that persistent constraints continue to undermine investment returns and industrial expansion.
The Centre identified key factors driving high production costs and weakening competitiveness against imported goods. These include inadequate and expensive infrastructure, port inefficiencies and supply chain bottlenecks, high energy costs, an unfavourable regulatory and business environment, unfair competition from cheap imports, high cost of funds, lack of long-tenured financing and weak consumer purchasing power.
Despite these challenges, CPPE observed that the macroeconomic environment has improved over the past year, citing greater stability in the foreign exchange market with prospects for gradual appreciation, as well as slowing inflation that could eventually lead to lower interest rates. It noted that FX stability offers meaningful relief for the largely import-dependent manufacturing sector by reducing input costs and improving planning certainty.
Other News
The Centre cautioned, however, that expectations for the sector must be carefully managed, as deep-rooted bottlenecks in power, logistics and ports cannot be resolved within a single fiscal year. Nevertheless, it expressed optimism that improving macroeconomic fundamentals would support better manufacturing performance in 2026, particularly for backward-integrated firms, companies less exposed to FX volatility and those aligned with domestic input sourcing.
“These segments are likely to record stronger returns on investment under the current reform conditions,” CPPE stated.
It added that unless structural risks are addressed, the manufacturing sector will remain uncompetitive. To this end, the Centre outlined key policy priorities for 2026, urging government to sustain macroeconomic stability, maintain FX market reforms and avoid disruptive policy reversals.
Other recommendations include fixing the power sector value chain through improved gas supply, generation, transmission and distribution; enhancing grid reliability to reduce dependence on costly captive power; and fully implementing the Presidential Power Initiative.
CPPE also called for improved access to long-term, affordable finance by empowering Development Finance Institutions, deployment of smart trade and protection policies, and measures to protect local manufacturers without harming consumer welfare.
The Centre further advocated deeper implementation of the “Nigeria First” policy, moving beyond rhetoric to enforcement, and leveraging public procurement at federal and state levels to prioritise Made-in-Nigeria goods.
