Manufacturers Association of Nigeria’s report shows that the federal government’s productions focused reforms and policies are enhancing manufacturers’ confidence in the business environment, writes Dike Onwuamaeze
The chief executives of Nigerian manufacturing firms reported a renewed level of trust in doing business in Nigeria. They hinged their trust on the expectation that the federal government’s economic reforms and policies will engender better business environment.
These reforms and policies include the recent tax law reforms, the presidential executive orders and other business-related policies like the Nigeria Industrial Policy, which was unveiled this year and the “Nigeria First” Policy. All these, according to the chief executives, cast a more positive outlook on manufacturing executives.
Their views were expressed in the latest edition of the Manufacturers CEO Confidence Index (MCCI) for the second quarter (Q2) of 2026, which is published by the Manufacturers Association of Nigeria (MAN).
The MCCI said: “The 52.1 aggregate MCCI in Q2 2026 was 3.4 points higher than in Q1 2026, signalling a return of confidence in manufacturing activities in Nigeria.
“It also suggested that uncertainties around government reforms over the past three years have subsided, assuring manufacturers that production incentives have regained maturity. However, the most recent MCCI was driven more by expected conditions in Q3 2026 than by the actual conditions of Q2 2026.”
It said that manufacturing executives arguably expected a push in operations due to emerging electioneering activities, the downplaying of inflationary pressures, the implementation of Executive Orders 003 and 005, and the mainstreaming of production-focused government policies such as the Nigeria Tax Act 2025, the Nigeria Industrial Policy 2025, and the “Nigeria First” Policy 2025.”
The publication stated that the aggregate MCCI for Q2 2026 was 52.1. This was 3.4 points higher than that of Q1 2026 which stood at 48.7.
However, manufacturing executives decried the employment and business conditions in the second quarter of 2026 as reflected in their indices that fall below the Q1 2026 record. The CEOs judgment of no confidence on the two factors was evident as the indices fall below 50 in Q1 and Q2 2026.
The Director General of MAN, Mr. Segun Ajayi-Kadri, said that it is noteworthy that the indices for other diffusion factors showed confidence and were above Q1 2026 levels, highlighting the start of a positive trend.
“In general, manufacturing executives were optimistic about improved conditions, as the indices for Q3 2026 were all projected to cross 50 as business condition will hit 55.6, employment condition, 55.2 and production condition 63,” he said.
A sectoral breakdown of the MCCI showed that manufacturers in the motor vehicle and miscellaneous assembly sectoral group reported high confidence in doing business of 69.4.
This was followed by those in wood and wood products’ 66.7 and textile, apparel and footwear’s 58.3. Others that recorded moderate confidence are businesses in non-metallic and mineral products, 51.1; domestic/industrial plastic and rubber, 52; food, beverages and tobacco 44.5 and basic metals, iron and Steel (44.8)
By contrast, manufacturers with no confidence were in chemicals and pharmaceuticals 47.7; electrical and electronics 42.5 and pulp, paper, printing, publishing and packaging, 38.6.
Six sectors recorded higher confidence in Q2 2026 when compared with their confidence scores in the previous quarter. These sectors were the Motor Vehicle and Miscellaneous Assembly, Wood and Wood Products, Basic Metals, Iron and Steel, Non-metallic and Mineral Products, Food, Beverages as well as Tobacco and Textile, Apparel and Footwear sectors.
By contrast, the Chemical and Pharmaceuticals and the Pulp, Paper, Printing, Publishing and Packaging sectors slipped from confidence to no confidence.
In contrast, the no-confidence in Electrical and Electronics sector became worse. It declined from 44.5 to 42.5. There was decreased confidence in the Domestic/Industrial Plastic and Rubber from 53.8 to 52.0.
Confidence Across Industrial Zones
High business confidence was reported by manufacturers in Edo and Delta, 66.7; Kano, 63.9; Kwara and Kogi, 63.0; Oyo, Ondo, Ekiti and Osun, 60.4 while Cross River and Akwa Ibom scored 60.4.
However, moderate prospects were reported by manufacturing executives in Ogun, 50.6; Imo and Abia, 50.9; Kaduna, 51.7; Apapa, 57.6 and Abuja, 58.3.
In addition, manufacturers with zero-bound confidence were those based in Anambra 41.7; Bauchi, Benue and Plateau, 40 and Ikeja with 47.7.
Compared with the previous quarter, the Q2 2026 confidence indices showed that majority of the industrial zones, which aws nine out of 13, recorded improved confidence.
Nevertheless, confidence fall from 55.3 to 51.7 in Kaduna. Worse still, while Ikeja slipped from confidence to no confidence, the absence of confidence among manufacturers in Anambra, Bauchi, Benue, and Plateau deepened.
Manufacturing Productivity
Two in every three CEOs cited commercial bank lending rates as a disincentive to manufacturing productivity. They, however, described the size of bank credit to manufacturers as insufficient.
In a similar vein, about half of manufacturers objected to improvements in forex sourcing, despite the present government’s policy of flexible exchange rates, which it has been promoting.
Only 27 per cent of manufacturing leaders saw government expenditure on infrastructure as encouraging to manufacturing activity.
Importantly, the current high-interest-rate regime was widely criticised by most CEOs for undermining manufacturing productivity. The interest rate is the cost of credit for manufacturers and directly influences production costs. Therefore, as the Central Bank of Nigeria (CBN) embarked on interest rate hikes to curb inflationary pressures, the manufacturing sector felt the heat.
Ajayi-Kadri said that although the Monetary Policy Rate (MPR) was recently slashed to 26.5 per cent and maintained there, it is still one of the highest in Africa.
“Consequently, there was limited flow of finance from commercial banks to manufacturers. This calls for correction, recognising the manufacturing sector as a critical pillar towards achieving economic growth and employment generation,” he said.
He added that even though manufacturers were aware of the present government’s stance on bridging the country’s infrastructure deficit, the spill-over effects of infrastructure expenditure had not been noticeable in the manufacturing sector.
“Manufacturers still incurred substantial costs to provide their own transport and logistics. This self-provision also extended to foreign exchange, particularly for importing materials and equipment to maintain productivity.
“The key issue was that self-provision was not only expensive but also a major hindrance to capacity utilisation in the manufacturing sector,” Ajayi-Kadri said.
Operating Environment
Since a supportive operating environment is essential for businesses to operate effectively, manufacturers voiced concerns about Nigeria’s numerous regulations in Q2 2026.
“While the Nigeria Tax Act 2025 aimed to reduce overregulation, manufacturers reported ongoing visits from different tax authorities demanding various taxes and levies. This casts doubt on the successful implementation of the new tax reforms.
“Furthermore, delays at ports and poor patronage of Nigerian-made products by Ministries, Departments and Agencies (MDAs) remained a bane to manufacturing performance in the Nigerian economy.
The MCCI stated that the Executive Order 003 has remained a paper document and called for its credible enforcement.
“Consequently, manufacturers failed to report significant reductions in their inventories,” they said.
The only aspect that received positive consideration from manufacturers was the local sourcing of raw materials. However, heightened insecurity in some parts of the country suggests that the development is unsustainable.
“It follows that Nigeria’s operating environment is not particularly supportive of manufacturing productivity. Consequently, although there was a subtle increase in sales volume during April–June 2026, manufacturers reported rising trends in production, distribution, and shipping costs.
“They reported constancy in capacity utilisation, production volume, investment levels and labour employment,” the MCCI said.
Challenges of Manufacturers
In Q2 2026, manufacturers identified limited access to finance as their primary challenge. They reported that credit flows to the manufacturing sector have been slowing, partly because the CBN has not significantly cut the MPR and partly because the apex bank has not been proactive in directing banks to prioritise loanable funds for manufacturing activity.
Similarly, limited electricity, signalled by frequent power outages, remained another major challenge for manufacturers. “Manufacturing executives expressed strong concern about the perennial inadequacy of power supply to factories.
“Despite the stable Naira following government reforms in the foreign exchange market, manufacturers described an insufficient supply of foreign exchange as limiting their operations.
“Similarly, while the government has enacted the Nigeria Tax Act 2025, which was in part aimed at forestalling multiple taxes and levies, manufacturers complained that they were still met with multiple tax collectors and regulators in Q2 2026.
“It follows that the implementation of the Nigeria Tax Act 2025 is yet to achieve its objective of relieving manufacturers of the burden of taxes and levies.
“Other challenges faced by manufacturers in Q2 2026 included inadequate government infrastructure support, high production costs, raw material shortages, and unfavourable trade policies,” MCCI said.