Manufacturers CIT payment decline hits 68% in Q1 2026 as Nigerian firms face rising costs, weak consumer demand and profitability pressures

Nigerian manufacturers recorded a significant setback in the first quarter of 2026 as Company Income Tax (CIT) payments from the sector plunged by 68.25 per cent year-on-year, according to new data released by the National Bureau of Statistics (NBS), raising concerns about the health of the country’s productive economy.

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The Manufacturers CIT Payment Decline saw tax remittances from the sector fall to N74.48 billion in Q1 2026 from N234.59 billion recorded in the corresponding period of 2025, representing a reduction of N160.11 billion within one year.

The decline was equally pronounced on a quarter-on-quarter basis. Manufacturing companies paid N141.84 billion in CIT during the fourth quarter of 2025, meaning remittances dropped by N67.36 billion or 47.49 per cent within three months.

Data contained in the NBS Company Income Tax report, sourced from the Nigeria Revenue Service, showed that total company income tax collections across all sectors stood at N1.37 trillion in the first quarter of 2026.

“Company Income Tax in Q1 2026 stood at N1.37tn, indicating a decrease of 8.08 per cent on a quarter-on-quarter basis from N1.49tn in Q4 2025,” the report stated.

The broader tax environment also reflected weakening corporate earnings, with overall CIT collections declining by 31.05 per cent compared to the same period last year. However, the manufacturing sector’s contraction was substantially deeper than the national average.

Despite the sharp reduction, manufacturing remained one of Nigeria’s largest contributors to domestic company income tax. The sector accounted for 13.82 per cent of domestic CIT collections during the quarter, trailing only financial and insurance activities, which contributed 24.73 per cent, and mining and quarrying, which accounted for 16.06 per cent.

In monetary terms, the financial and insurance sector contributed N133.27 billion, mining and quarrying paid N86.55 billion, while manufacturing remitted N74.48 billion.

When measured against total CIT receipts of N1.37 trillion, including foreign currency-related payments, manufacturing’s contribution represented approximately 5.45 per cent of overall collections.

The report highlighted a growing dependence on foreign-related tax inflows. Domestic CIT generated N538.91 billion, while foreign CIT payments accounted for N828.82 billion, representing roughly 60.6 per cent of total company income tax receipts during the quarter.

Economic analysts say the Manufacturers CIT Payment Decline may reflect weakening profitability across the industrial sector, as businesses continue to contend with elevated energy costs, exchange rate volatility, high borrowing costs, logistics challenges and subdued consumer purchasing power.

The first quarter of 2026 also marked the implementation phase of Nigeria’s new tax framework, signed into law by President Bola Tinubu.

While the reforms reduced the standard Company Income Tax rate from 30 per cent to 25 per cent, experts note that adjustments in compliance schedules and company earnings could have influenced remittances during the transition period.

The reforms were championed by Taiwo Oyedele, who had argued that lower tax rates and a zero per cent CIT threshold for businesses with annual turnover of N100 million or less would encourage growth among small and medium-sized enterprises.

The weakness was not confined to manufacturing. Agriculture, forestry and fishing recorded the steepest quarter-on-quarter decline at 73.52 per cent, while construction followed with a 63.15 per cent drop.

Conversely, water supply, sewerage, waste management and remediation activities posted the strongest quarterly growth at 485.71 per cent. Activities of households as employers also recorded robust growth of 197.04 per cent.

The latest figures suggest a shifting composition of Nigeria’s corporate tax base, with greater reliance on financial services, mining activities and foreign tax contributions, while traditional productive sectors contribute a smaller share than in previous years.

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For policymakers, the data presents a critical test of whether recent tax reforms, monetary adjustments and industrial policies can revive profitability in manufacturing, a sector widely regarded as essential to job creation, value addition and long-term economic diversification.