The Manufacturers Association of Nigeria (MAN) has cautioned that the Federal Government’s ambition to achieve a $1 trillion economy by 2026 is at risk due to the sluggish growth of the manufacturing sector. MAN President, Francis Meshioye, highlighted this concern in a statement on Monday, pointing to a Gross Domestic Product (GDP) increase of 3.46% in Q3 2024—an improvement from 3.19% in the previous quarter, but still far below the 6% annual growth required to meet the target.

Meshioye raised alarm over the dominance of the services sector, which grew by 5.19% and contributed 53.58% to GDP, overshadowing industrialisation efforts. “The services sector’s continuous expansion at the expense of manufacturing and employment undermines the economy’s industrialisation goals,” he explained. This imbalance, he noted, hampers efforts to reduce foreign exchange demand pressures, promote value addition, and generate mass employment needed for sustainable growth.

According to the Nigerian Bureau of Statistics (NBS), the manufacturing sector recorded a growth rate of only 2.18% in Q3 2024, contributing a mere 8.21% to GDP—down from 8.42% in the same period in 2023. Meshioye described this as a stark reflection of the “detrimental impact of prevailing macroeconomic policies,” citing high interest rates, escalating energy costs, and a volatile exchange rate as key obstacles.

ALSO READ:  Non-Oil Exports Crucial for Nigeria’s Economic Stability, Says MAN

He further noted that agriculture and manufacturing, critical pillars of industrialisation, are failing to drive the economy due to challenges such as security issues in farming regions, which have negatively affected agro-allied industries. “The limited growth in these sectors is worsening the cost of living crisis and leaving manufacturers with increased unsold inventory due to reduced consumer purchasing power,” Meshioye stated.

While subsectors like food, beverages, and tobacco remain significant contributors, overall manufacturing growth has slowed year-on-year, falling from 8.46% in Q2 2024 to 8.21% in Q3. This decline, coupled with high unemployment, inflation, and weak foreign investment, threatens the nation’s industrial progress.

To revive the sector, MAN urged the Federal Government to implement immediate interventions. Key recommendations include introducing single-digit interest rates for the productive sector, recapitalising the Bank of Industry to address credit demands, and streamlining import duty rates for critical production inputs. Additionally, the group called for public-private partnerships to address infrastructure gaps, a review of electricity tariffs, and ensuring stable domestic gas supply.

Meshioye also urged the government to address environmental compliance costs, maintain the current excise duty on non-alcoholic beverages, and direct the Central Bank of Nigeria to resolve $2.4 billion in outstanding foreign exchange forward contracts. “The Federal Government must act decisively to create a conducive environment for the manufacturing sector. Without this, the aspiration for a $1 trillion economy will remain unattainable,” he concluded.