On March 8, 2026, the Nigerian Economic Summit Group (NESG), issued a stark warning about Nigeria’s economic trajectory, highlighting what it described as a growing trend of deindustrialisation amid persistent weaknesses in the country’s manufacturing sector. The concerns were outlined in the group’s latest 2025 Q4 GDP Alert — a regular assessment of Nigeria’s economic performance and prospects.
Manufacturing Sector: Weak, Narrow and Vulnerable
Despite modest signs of recovery in the broader economy, the NESG flagging of the manufacturing performance paints a deeply concerning picture:
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The sector remains sluggish and overly concentrated in just a handful of subsectors, restricting both growth and resilience.
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In the fourth quarter of 2025, around 74% of manufacturing output came from just three main areas: Food, Beverages and Tobacco, Cement, and Textiles.
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Traditional growth drivers like oil refining, motor vehicle assembly, and chemicals and pharmaceuticals remain minor contributors to overall manufacturing output.
This disproportionate reliance weakens the industry’s capacity to absorb shocks, innovate, and produce substantial employment or value‑added exports.
Why NESG Sees a Trend Toward Deindustrialisation
NESG’s alert goes beyond describing weak performance — it highlights structural deindustrialisation, meaning that instead of expanding, Nigeria’s manufacturing base may be shrinking or stagnating relative to the rest of the economy.
According to the think tank:
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Although some economic growth is occurring, it is not deep enough to create the jobs or productivity gains necessary to meaningfully reduce poverty.
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Chronic operating challenges — from poor infrastructure to high costs — continue to stifle manufacturers:
• Unreliable electricity increases production costs, forcing firms to depend on costly standby power.
• Limited access to affordable finance remains a pervasive constraint.
• Security concerns and weak logistics disrupt supply chains.
• Dashed intersectoral linkages weaken the ability of agric‑industry networks to drive broader expansion.
These bottlenecks erode competitiveness and deter fresh investment, whether domestic or foreign.
Consequences of a Weak Manufacturing Base
The implications of deindustrialisation go beyond headline GDP numbers:
1. Job Creation Stalled
Manufacturing has historically been one of the most effective pathways to large‑scale, formal job creation. A lagging sector means fewer formal jobs, especially for Nigeria’s growing population of youths, intensifying unemployment pressures.
2. Persistent Import Dependency
Weak production capabilities reinforce reliance on imports for basic and intermediate goods, draining foreign exchange reserves and hurting the trade balance.
3. Decline in Value‑Added Output
Even sectors like textiles — once cornerstones of Nigeria’s industrial complex — are shrinking. Recent data show the textile industry’s GDP contribution fell by 3.6% between 2023 and 2025, reinforcing the structural decline.
Positive Signals and Sector Interplays
The NESG report does acknowledge some positive developments — particularly in agriculture, where rising output has helped moderate food inflation and ease broader price pressures. However, this momentary relief is fragile, with risks like flooding and insecurity potentially reversing gains.
This underscores the interconnected nature of Nigeria’s economy: strengthening agriculture productivity alone won’t deliver structural transformation unless it ties into robust industrial processing and value chain development.
Expert Views and the Path to Industrial Revival
For years, economists and policymakers have echoed NESG’s cautionary notes: Nigeria’s industrialisation remains unrealised and, in some areas, regressing. In previous NESG policy documents, analysts pointed out that manufacturing contributes less than 10% of GDP — far below global peers — while capacity utilisation remains low.
These patterns reflect deeper structural issues:
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Inadequate electricity infrastructure dominating manufacturing costs.
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Weak integration into global value chains and limited export competitiveness.
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A narrow industrial base concentrated in light manufacturing with low spillover into heavy industry or technology sectors.
Policy Imperatives: What Needs to Change
NESG’s warning is more than a critique — it’s a call to action. Experts argue that reversing deindustrialisation will require:
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Targeted infrastructure investment, especially reliable power and transportation networks.
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Improved access to finance for manufacturers and SMEs.
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Strengthening agro‑industrial and light manufacturing linkages to deepen domestic value chains.
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Export‑oriented strategies to help Nigerian firms compete regionally and globally.
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Consistent policy frameworks to give investors confidence and reduce the costs of doing business.
Without these policy shifts, Nigeria risks falling further into a model where growth is driven more by services and consumption rather than productive capacity — a structural pattern that undermines sustainable development.
Conclusion: A Defining Economic Moment
NESG’s alert arrives at a pivotal time for Nigeria’s economy. While growth figures may show gradual improvement, the quality and inclusiveness of that growth remain in question.
The warning of deepening deindustrialisation poses a serious challenge for policymakers, businesses, and development partners alike. Addressing it will require not just broad economic reforms, but strategic restructuring that empowers manufacturing to serve as a true engine of growth, jobs, and prosperity.
