Manufacturers in Nigeria regained confidence in the business environment in the second quarter of 2026, with the Manufacturers Association of Nigeria (MAN) reporting an improvement in its Manufacturers CEO Confidence Index (MCCI), even as industry operators continued to grapple with high interest rates, limited access to finance, power shortages and foreign exchange constraints.
The MCCI rose to 52.1 points in Q2 2026, up from 48.7 points in Q1, indicating a return to positive business sentiment among manufacturing executives.
According to MAN’s Q2 2026 MCCI report, the improved outlook was driven largely by expectations of a better commercial environment rather than improvements in current business conditions or employment.
The association said recent government initiatives, including the Nigeria Tax Act 2025, the Nigeria Industrial Policy and the “Nigeria First” policy, contributed to a more optimistic outlook among manufacturers.
However, the report identified limited access to finance, frequent power outages, high production costs, inadequate foreign exchange availability, low patronage and multiple taxation as the sector’s major challenges during the period.
MAN said manufacturers were dissatisfied with the cost and availability of bank credit, blaming high lending rates on the Central Bank of Nigeria’s monetary policy stance.
With the Monetary Policy Rate (MPR) at 26.5 per cent, manufacturers argued that commercial banks were charging prohibitively high interest rates, increasing production costs and restricting investment.
The report noted that many manufacturers had not experienced significant productivity gains from government infrastructure spending, while foreign exchange sourcing remained inadequate despite exchange-rate reforms.
Manufacturing executives also expressed concerns over overregulation and uncertainty surrounding the implementation of the Nigeria Tax Act 2025, saying multiple tax collectors and regulatory agencies continued to burden businesses.
Port congestion was also cited as a major obstacle to the timely importation of raw materials, although manufacturers reported some improvement in local sourcing of inputs.
MAN said the lack of incentives for ministries, departments and agencies (MDAs) to procure locally manufactured goods had prevented a significant reduction in inventories of unsold products.
The association urged the CBN to reduce the MPR to below 20 per cent to stimulate manufacturing growth and improve access to affordable credit.
It also called for priority foreign exchange allocation for manufacturers and recommended that MDAs be required to source at least 80 per cent of their procurement from Made-in-Nigeria products.
The survey, which covered 400 CEOs of manufacturing companies across MAN’s 14 industrial zones and 10 sectoral groups, showed that confidence is expected to improve further in the third quarter.
Manufacturers projected stronger business conditions (55.6), employment conditions (55.2) and production levels (63.0) in Q3 2026.
Among sectoral groups, Motor Vehicle and Miscellaneous Assembly recorded the highest confidence level at 69.4 points, followed by Wood and Wood Products (66.7) and Textile, Apparel and Footwear (58.3).
The weakest confidence levels were recorded in Pulp, Paper, Printing, Publishing and Packaging (38.6), Electrical and Electronics (42.5) and Chemicals and Pharmaceuticals (47.7).
Across industrial zones, the strongest confidence was reported in Edo/Delta (66.7), Kano (63.9), Kwara/Kogi (63.0), Oyo/Ondo/Ekiti/Osun (60.4) and Cross River/Akwa Ibom (60.4).
However, manufacturers in Anambra (41.7), Bauchi/Benue/Plateau (40.0) and Ikeja (47.7) reported weak business confidence.
The report showed that nine of the 13 industrial zones surveyed recorded improved confidence compared with the previous quarter.
On productivity, MAN said rising lending rates remained the biggest constraint, with about two-thirds of manufacturing CEOs describing commercial bank interest rates as a major disincentive to production.
Manufacturers also reported that government infrastructure spending had not significantly reduced logistics and transport costs, forcing many firms to continue self-provisioning infrastructure and foreign exchange at considerable expense.
The report added that production, distribution and shipping costs continued to rise during the quarter, while capacity utilisation, production volume, investment and employment remained largely unchanged.
MAN concluded that improving access to affordable finance, electricity, foreign exchange and a more supportive operating environment would be critical to increasing manufacturing output, capacity utilisation and employment in Nigeria.
Comment here