The Nigerian Economic Summit Group (NESG) has raised concerns over a growing deindustrialisation trend in Nigeria, warning that the country’s manufacturing sector remains weak and heavily concentrated in only a few subsectors.
The warning was contained in the group’s latest 2025 Q4 GDP Alert, which noted that although Nigeria’s economic growth is gradually improving, it remains too slow to generate sufficient jobs or significantly reduce poverty.
The think tank also pointed to productivity constraints across key sectors, particularly agriculture, manufacturing, and trade, as major factors limiting the economy’s ability to expand output and create employment at scale.
What NESG is saying
The NESG said Nigeria’s current economic growth trajectory remains insufficient to tackle unemployment and poverty despite signs of gradual improvement. It noted that structural challenges across key sectors continue to constrain productivity and economic expansion.
- “Although growth is gradually improving, it remains well below the level required to generate sufficient jobs and meaningfully reduce poverty.”
- “Together, these challenges raise operating costs, disrupt production activities, and ultimately constrain their capacity to expand output and create employment at scale.”
- “This underscores the need to strengthen intersectoral linkages, particularly across agro-processing and light manufacturing value chains, to ensure that growth in leading subsectors generates sector-wide productivity gains.”
The group added that persistent structural bottlenecks—such as poor infrastructure, limited access to finance, unreliable electricity supply, and insecurity—continue to increase operating costs and disrupt business activities.
More insights
The NESG observed that Nigeria’s manufacturing sector has remained sluggish over several quarters, reflecting what it described as a persistent deindustrialisation trend. According to the report, the sector’s growth has largely been driven by only a handful of subsectors.
- Food, Beverages and Tobacco, Cement, and Textiles accounted for about 74 per cent of total manufacturing output in the fourth quarter of 2025.
- Subsections such as oil refining, motor vehicle assembly, and chemical and pharmaceutical production still contribute relatively little to overall manufacturing output.
- The limited contribution from these emerging industries has prevented the sector from generating significant spillover benefits across the broader manufacturing ecosystem.
- Heavy reliance on a few subsectors weakens the sector’s resilience and slows the pace of wider industrial expansion.
The NESG noted that expanding production in high-potential industries could strengthen value chains and boost overall productivity within the manufacturing sector.
While the manufacturing sector remains weak, the report highlighted some positive developments in agriculture. The NESG noted that improvements recorded over the last three quarters of 2025 have contributed to a gradual decline in food inflation.
- Increased agricultural output over recent quarters has helped ease food supply pressures.
- The moderation in food prices has contributed to broader disinflationary trends in the economy.
- However, flooding and insecurity remain key risks that could disrupt farming activities.
- These risks could potentially reverse recent gains in food price stability if not effectively addressed.
The think tank stressed that sustaining agricultural productivity will be critical to maintaining stable food prices and supporting overall economic growth.
Backstory
Last week, the National Bureau of Statistics (NBS) reported that Nigeria’s economy grew by 4.07 per cent year-on-year in real terms in the fourth quarter (Q4) of 2025.
The NBS report shows broad-based expansion across key sectors of the economy in Q4 2025.
Growth was supported by stronger performances in agriculture, industry, oil, and non-oil activities compared to the same period in 2024.
What you should know
- The International Monetary Fund projects Nigeria’s economy will grow by 3.9 per cent in 2025 and 4.2 per cent in 2026.
- The World Bank has maintained its 4.4 per cent growth forecast for Nigeria in 2027.
