The Centre for the Promotion of Private Enterprise has warned that Nigeria may struggle to achieve sustainable structural transformation without a stronger manufacturing sector, despite improved economic growth recorded in the first quarter of 2026.

The position was contained in the organisation’s latest policy.

The report followed the release of fresh data by the National Bureau of Statistics, which showed that Nigeria’s real Gross Domestic Product (GDP) expanded by 3.89 per cent year-on-year in Q1 2026, up from 3.13 per cent recorded in the corresponding period of 2025.

According to the CPPE, the latest GDP data points to improving macroeconomic stability and stronger resilience across the trade and services sectors. However, the organisation noted that the weak performance of the manufacturing sector and the sharp decline in electricity supply continue to pose significant structural challenges to the economy.

“Industrialization remains the most sustainable pathway to large-scale job creation, export competitiveness and inclusive growth,” the group stated.

“The economy cannot achieve durable structural transformation without a stronger manufacturing base.”

The manufacturing sector grew by 3.29 per cent in the first quarter of 2026, representing an improvement from the 1.13 per cent growth recorded in the fourth quarter of 2025.

The growth was driven by increased activity in petroleum refining, food and beverages, cement, chemicals, and pharmaceutical production.

However, the sector’s contribution to GDP remained below 10 per cent, weighed down by high energy costs, elevated interest rates, poor infrastructure, logistics bottlenecks, and policy uncertainty.

The CPPE also pointed to what it described as a significant structural imbalance within the Nigerian economy.

According to the group, the non-oil sector contributes about 96.08 per cent of Nigeria’s GDP but generates less than 15 per cent of the country’s foreign exchange earnings, underscoring weak export competitiveness and limited integration into global value chains.

Meanwhile, growth in the oil and gas sector slowed to 2.57 per cent in the first quarter of 2026, down from 6.79 per cent recorded in Q4 2025, as crude oil production remained below national output targets and budget benchmarks.

Nigeria’s economy nevertheless sustained growth across key sectors during the quarter, driven by stronger agricultural activity, improved industrial output, and continued expansion in the services sector.

In nominal terms, aggregate GDP at basic prices increased to N110.79 trillion in the first quarter of 2026 from N94.05 trillion in the corresponding period of 2025, representing a nominal year-on-year growth of 17.79 per cent.

The services sector remained the largest contributor to economic activity, accounting for 57.73 per cent of GDP.
Sub-sectors including information and communications technology, financial services, and entertainment recorded double-digit growth during the quarter.