Nigeria’s manufacturing sector emerged as the star performer in October 2025, recording the strongest growth among all economic sectors, according to the latest Business Confidence Monitor released by the Nigerian Economic Summit Group and Stanbic IBTC Bank.
The manufacturing sector’s Business Confidence Index rose by 8.8 points to reach 111.3 in October 2025, marking the highest monthly gain across all sectors and representing a remarkable 45-point improvement from the 71.3 recorded in October 2024.
This performance highlights a sustained expansion in the manufacturing sector for eleven consecutive months.
The numbers behind the growth
The October 2025 NESG-Stanbic IBTC Business Confidence Monitor showed that while the overall Current Business Performance Index rose to 111.3 points, up from 107.9 in September 2025, manufacturing’s sector contribution was particularly significant.
Manufacturing’s 8.8 point monthly increase outpaced all other sectors, including Trade (from 7.8 points to 115.4), Non-Manufacturing (115.0), Agriculture (111.4), and Services (111.0).
Breaking down the manufacturing sector’s performance, the report revealed improved conditions across food and beverage manufacturers, the cement industry, and plastic and rubber products segments.
What Drove the October Surge?
Three primary factors led to manufacturing’s robust October performance:
Easing inflation and stable exchange rates
Nigeria’s inflation rate slowed down to 18.02% year-on-year in September 2025, down from 34% in late 2024. The report projects further moderation to between 15.84% and 16.22% in October, and potentially 14.25% to 14.62% by November 2025.
Also, the recent exchange rate stability created a more favorable operating environment.
“We believe lower inflation and stable exchange rate supported an improvement in demand and production,” the report’s authors noted.
Improved demand conditions
Consumer demand showed signs of recovery in October, driven partly by easing inflation. When inflation reached 34.6% in November 2024, manufacturers had accumulated ₦1.4 trillion worth of unsold inventory.
The gradual improvement in demand conditions throughout 2025 helped manufacturers reduce these inventory levels and restore production rhythms.
Enhanced access to credit
Manufacturers reported increased access to credit in October, enabling businesses to purchase raw materials, invest in maintenance, and manage cash flow more effectively.
The report’s sub-indices showed that access to credit improved relative to August 2025.
Operational performance across key metrics
According to the report, manufacturing’s improved performance manifested across multiple metrics:
- Production levels rose to 117.6 points in October from 98.0 in September
- Operating profits improved to 107.3 points
- Supply orders strengthened to 123.2 points, indicating more purchase orders from domestic and international buyers
- Employment stood at 141.7 points, up from 137.6 in September
- Cash flow conditions improved to 117.7 points from 127.0 in September
Persistent challenges
Despite positive growth, significant operational challenges remain:
The cost of doing business sub-index stood at 127.0 in October, indicating that while manufacturers performed better, they did so against elevated operational costs.
Energy supply continues to plague manufacturers, with unreliable electricity forcing them to generate their own power at costs 30-40 percent higher than grid electricity would be.
Security concerns, policy uncertainty, and access to foreign exchange, though improved, continue to constrain the sector’s full potential.
Grounds for optimism
The Future Business Expectation Index for manufacturing reached 146.7 points in October, the second-highest among all sectors, indicating substantial optimism about the coming months.
The Manufacturers Association of Nigeria has projected that the sector could achieve 3.1 percent real growth in 2026, with manufacturing’s contribution to real GDP potentially rising to 10.2 percent, up from 9.62 percent in the first quarter of 2025.
This outlook depends on several key factors:
Policy reforms and incentives
Effective execution of the Nigeria tax act 2025 under the new tax laws, implementation of the National Single Window Project to streamline trade, and purposeful implementation of the Nigeria Industrial Policy will be crucial for Nigeria’s manufacturing sector growth in 2026.
Economic stability
Economists expect Nigeria’s overall GDP growth to reach 4% in 2026, driven by higher oil output and expansion in financial and manufacturing sectors.
Interest rates are expected to decline as inflation continues to moderate, making credit more affordable for manufacturers.
The Dangote refinery impact
The International Monetary Fund expects the Dangote Refinery to increase non-oil GDP growth by approximately 1.5% in 2026.
Oil refining has already grown for three consecutive quarters, reaching 15.78% year-on-year in Q2 2025, up from 11.51% in Q1 2025.
Domestic refining should reduce Nigeria’s dependence on imported petroleum products, conserving foreign exchange and reducing transportation costs for manufacturers.
The refinery’s production of petrochemical feedstocks could also support the manufacturing of plastics, chemicals, and synthetic materials.
The Path Forward
For now, the October 2025 numbers offer reason for cautious optimism.
Nigeria’s manufacturing sector demonstrated that when conditions improve, the sector can improve positively. The question is whether those improved conditions can be sustained and built upon.
As businesses look toward 2026, the hope expressed by the Manufacturers Association of Nigeria represents not just an economic target but a broader aspiration that Nigeria can finally harness its industrial potential to drive economic growth and reduce its dependence on imports and commodity exports.
