Nigeria’s manufacturing sector experienced a slower pace of growth in September, with operational challenges affecting critical subsectors across the industry.
The NESG-Stanbic IBTC Business Confidence Monitor Index for manufacturing fell to 102.5 points in September from 106.2 points the previous month, according to a recent report. While the sector remained in expansion territory, the decline reflected mounting pressure from infrastructural and economic constraints.
The Business Confidence Monitor is a survey-based assessment that captures current business sentiment in Nigeria’s economy and provides short-term projections based on evaluations from business managers. The Nigerian Economic Summit Group surveys in partnership with Stanbic IBTC Bank.
Several subsectors contributed to the deceleration. Food, Beverage and Tobacco, Cement, Plastic and Rubber Products, Wood and Wood Products, Non-Metallic Products, and Pulp, Paper and Paper Products all recorded declines during the month.
Manufacturing firms cited unreliable electricity supply as a major operational challenge, with frequent power outages disrupting production timelines and limiting their capacity to fulfill customer orders. The expense of running diesel-powered generators continues to cut into profit margins, while regular power cuts force companies to scale back production and slow down operations.
The subsectors that contracted in September collectively represent more than 75 percent of Nigeria’s total manufacturing output, which accounts for the sector’s reduced momentum during the period.
Manufacturers continue to face multiple headwinds, including heavy tax burdens, limited access to financing, shortages of raw materials, insufficient electricity supply, high rental costs, security concerns, inadequate infrastructure, and escalating operational expenses. These factors collectively hinder expansion, growth, competitiveness, and profitability throughout the sector.
The non-manufacturing sector also saw a modest decline in performance, with its Business Confidence Monitor Index dropping to 114.5 points from 116.2 points in August. This marked a return to the pattern of declining business activity following a brief improvement the month before.
Escalating business constraints have created difficult operating conditions for many non-manufacturing firms, with security issues emerging as a particularly significant concern. The non-manufacturing sector includes crude petroleum, natural gas, oil and gas services, and construction activities.
