Manufacturing Output Growth is expected to hit 3.1% in 2026 as MAN links gains to tax incentives, better credit access and stronger government patronage

Manufacturing Output Growth is expected to surge in 2026 as the Manufacturers Association of Nigeria forecasts a robust rebound driven by tax incentives, levy harmonisation and renewed government patronage.

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The association projected a 3.1 per cent rise in manufacturing output, a significant improvement on the 1.6 per cent recorded in the second quarter of 2025.

According to the latest Manufacturers’ CEOs Confidence Index, the anticipated growth will lift the sector’s contribution to real Gross Domestic Product to 10.2 per cent next year.

The association believes this positive outlook reflects major policy shifts under the new tax regime set to take effect in January 2026.

MAN’s Director of Research and Economic Policy, Dr Oluwasegun Osidipe, explained that the projected gains hinge on the effective enforcement of newly introduced incentives.

He cited the National Single Window Project and the alignment of the Nigeria Industrial Policy with the Nigeria First framework as crucial pillars that will determine the success of the reforms.

Osidipe stressed that the removal of redundant levies would ease the long-standing burden of multiple taxation that had stifled manufacturing expansion.

He noted that businesses previously paid charges across hundreds of local government areas simply to move goods, a practice he described as deeply obstructive.

Under the new laws, he said, “the majority of those taxes are gone,” creating space for businesses to operate with renewed confidence.

He added that targeted incentives for small and medium industries would free up liquidity and allow manufacturers to reinvest in production.

Since most MAN members fall within this category, the economist said the reforms would provide meaningful relief capable of boosting output.

There are already signs of improvement. Sector capacity utilisation has risen from 57.6 per cent in the second half of 2024 to 61.3 per cent in the first half of 2025.

Osidipe attributed this to ongoing government stimulus, including access to single-digit interest loans under the N75bn industrial support fund.

He said that when credit previously priced at 32 to 35 per cent becomes available at single-digit rates, production, employment and sales naturally increase.

He also emphasised that government patronage remains a powerful accelerator of growth. He pointed to Cross River State’s commitment to sourcing its automobile needs locally as an example of impactful support.

He urged more states to adopt similar approaches, noting that increased patronage from the country’s largest spender would ramp up output across the sector.

The association’s broader outlook includes expectations of a stronger naira, projected to trade between N1,300 and N1,400 per dollar in 2026. MAN linked this to rising oil prices, healthier reserves and higher foreign investment inflows.

The association also anticipates headline inflation easing to 14 per cent, helped by steadier food and energy prices, while the Central Bank of Nigeria may cut the benchmark interest rate to around 23 per cent to stimulate credit expansion.

Overall GDP growth is projected to reach four per cent in 2026, supported by higher oil output, better fiscal performance, stronger manufacturing and financial services, and increased consumption ahead of the election season in the final quarter of the year.

Nigeria’s new tax laws become operational in January 2026, following President Bola Tinubu’s assent to four major reform bills in June 2025.

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The laws seek to streamline levies, eliminate multiple taxation and introduce targeted incentives to drive investment and productivity across the manufacturing landscape.