Nigeria’s manufacturing sector is facing mounting pressure from persistent electricity outages, rising production expenses and limited access to credit, with new business data revealing a slowdown in industrial activity.
The October 2026 Business Confidence Monitor by the Nigerian Economic Summit Group (NESG) showed that manufacturing remained in expansion territory, but the pace of growth weakened amid continuing infrastructure and financing challenges.
The sector’s Current Business Performance Index fell to 107.3 points in October, compared with 108.4 points in September and 111.3 points recorded in October 2025.
The report identified unreliable electricity, shortages of raw materials, high rental costs, restricted access to credit and inadequate infrastructure as major obstacles confronting manufacturers.
These challenges are increasing the cost of production and making it more difficult for businesses to maintain efficient operations and remain competitive.
Textile Industry Suffers Sharp Decline
The slowdown was particularly pronounced in some key manufacturing subsectors.
Textile, Apparel and Footwear slipped into contraction, with its performance index dropping sharply to 99.7 points in October from 127.5 points in September.
The cement subsector also remained in contraction territory, recording 94.5 points.
However, Food, Beverage and Tobacco was the only one of the three major manufacturing subsectors to record improved performance and remain in expansion territory.
The findings highlight the uneven performance across the industrial sector, as businesses contend with rising operating expenses and difficulties securing essential production inputs.
Nigeria’s Overall Business Activity Also Slows
Beyond manufacturing, the report showed that Nigeria’s overall Current Business Performance Index declined to 115.4 points in October from 117.8 points in September.
Despite the month-on-month slowdown, the index remained above the 111.3 points recorded in October 2025, indicating that business activity was still expanding compared with the same period last year.
All sectors remained in expansion territory, but Trade and Services were the only sectors to record improved performance compared with September. Agriculture, Manufacturing and Non-Manufacturing experienced slower growth.
The NESG’s cost-of-doing-business sub-index stood at 45.2 points, while the prices sub-index recorded 65.5 points. Both remained below the 100-point neutral threshold, indicating that elevated operating costs and producer prices continued to affect a majority of businesses.
Unreliable electricity remains a major concern for manufacturers because interruptions can disrupt production lines and force companies to depend on generators and other alternative energy sources, adding further pressure to already stretched budgets.
Manufacturers Hope for Better Conditions
Despite the challenges, the report indicated that business expectations improved for the coming months.
The Future Business Expectations Index rose to 130.8 points in October from 128.9 points in September, signalling stronger optimism about business conditions over the next one to three months.
Manufacturing recorded an expectations index of 145.1 points, while Trade led with 194 points. Non-Manufacturing recorded 135 points.
The NESG attributed the improved outlook largely to expectations of stronger consumer demand during the year-end festive season and increased spending associated with ongoing political campaign activities.
However, whether this optimism translates into stronger industrial output will depend partly on businesses’ ability to manage production costs, secure financing and overcome persistent electricity and infrastructure challenges.
The report underscores the need for sustained improvements in power supply, access to affordable credit and the availability of production inputs to support manufacturers and strengthen Nigeria’s industrial growth.
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