October 4, (THEWILL) – Nigeria’s manufacturing sector is growing, but the latest trade data suggest that the increase in domestic production is not yet large enough to significantly reduce the country’s dependence on imported manufactured goods.
That distinction is important because Nigeria’s broader trade position has improved sharply. The country recorded a N12.60 trillion merchandise trade surplus in the second quarter of 2026, more than double the N6.25 trillion recorded in the same period of 2025. But the improvement came largely from stronger exports of crude oil and other petroleum products, rather than from a structural shift towards manufactured exports.
At the same time, manufactured goods remained the dominant category of imports.
The National Bureau of Statistics reported that Nigeria imported manufactured goods worth N9.51 trillion in Q2 2026, up 20.65 percent from N7.88 trillion in Q2 2025 and 12.10 percent from N8.48 trillion in the first quarter of 2026. That took manufactured-goods imports to about N18 trillion in the first half of the year, compared with N15.40 trillion in H1 2025.
The increase is occurring despite a stronger manufacturing sector. Real manufacturing GDP expanded by 3.24 percent year-on-year in Q2, compared with 1.69 percent in the corresponding quarter of 2025. However, the sector’s contribution to real GDP fell to 7.72 percent from 7.81 percent a year earlier and 9.57 percent in Q1 2026.
The numbers therefore point to a gap between growth in factory output and the scale of import substitution taking place.
Nigeria’s manufacturing industry is producing more, but imported manufactured products are entering the economy at a much faster rate. In Q2 alone, the value of manufactured goods imported was more than 24 times the value exported.
Manufactured-goods exports stood at just N393.03 billion during the quarter, although that represented a 29.87 percent improvement from N302.64 billion in Q1. More importantly, exports were down 51.10 percent from N803.81 billion in Q2 2025.
That creates a substantial imbalance. On the import side, Nigeria is absorbing N9.51 trillion worth of manufactured products in a single quarter. On the export side, local manufacturers generated less than N400 billion in exports over the same period.
The composition of manufacturing growth also matters.
The Q2 GDP figures show that some of the strongest growth came from capital-intensive activities. Oil refining expanded by 43.94 percent in real terms, while cement grew by 12.75 percent and chemical and pharmaceutical products by 7.70 percent. Food, beverages and tobacco, one of the largest manufacturing groups, grew by 2.79 percent.
At the other end, textile, apparel and footwear contracted by 1.23 percent in real terms for a sixth consecutive quarter, while motor vehicles and assembly declined by 1.02 percent. The uneven performance suggests that manufacturing growth is not broad enough across consumer and labour-intensive industries to indicate a widespread replacement of imported products.
This is particularly relevant because import substitution does not simply mean increasing total manufacturing output. It requires domestic producers to capture demand that is currently being met by foreign suppliers.
The latest trade figures show that this transition remains incomplete.
Some imports are clearly productive rather than substitutive. Nigeria needs machinery, industrial equipment, specialised components, chemicals and other inputs that domestic manufacturers cannot yet produce competitively or in sufficient quantities. In Q2, machinery and transport equipment was one of the largest broad import categories, valued at N5.46 trillion, while chemicals and related products accounted for N2.51 trillion.
Such imports can actually support industrialisation by allowing Nigerian companies to expand production capacity.
The concern is that the import bill also contains substantial demand for finished manufactured products. The NBS listed used vehicles, motorcycles and other manufactured products among the major imports during the quarter. Manufactured goods overall accounted for N9.90 trillion of Nigeria’s Q2 trade, with imports representing the overwhelming share.
That distinction makes the import figures more revealing. A rising import bill is not necessarily evidence of deindustrialisation if factories are importing machines and raw materials to produce more locally. The problem emerges when imports of finished goods continue rising while domestic production and manufactured exports remain comparatively weak.
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Nigeria’s exchange-rate adjustment has also not eliminated this dependence. A weaker naira raises the local-currency cost of imports, but higher import prices do not automatically create local substitutes. Where domestic producers lack sufficient capacity, reliable power, affordable finance, technology, logistics or access to raw materials, businesses and consumers can remain dependent on foreign supply even when it becomes more expensive.
The manufacturing data reinforce that point. Although real manufacturing growth improved to 3.24 percent in Q2, the sector’s share of real GDP declined. Manufacturing therefore expanded, but it did not expand fast enough to increase its relative weight in the economy.
The wider trade figures can obscure this weakness.
Nigeria’s total exports reached N27.02 trillion in Q2, up 18.77 percent year-on-year, while imports fell 12.55 percent to N14.42 trillion. Crude oil alone accounted for N12.91 trillion of exports, while other oil products contributed N10.38 trillion.
The result was a large national trade surplus, but manufactured exports contributed only N393.03 billion.
This means Nigeria can improve its external trade position without necessarily becoming less dependent on foreign manufactured products. Higher oil and petroleum-product exports can generate enough foreign exchange to finance imports, allowing the overall trade balance to improve even while the manufacturing trade gap remains wide.
That is the central weakness in the current pattern.
The objective of industrialisation is not simply to produce more within the manufacturing sector. It is to increase the share of domestic demand that local companies can supply competitively, while also developing products that can be sold beyond Nigeria.
On the evidence from Q2 2026, Nigeria is making some progress on the first part, but the import numbers show that local production is still struggling to keep pace with domestic demand. The second part is even more challenging: manufactured exports fell by more than half year-on-year even as manufactured imports rose by more than a fifth.
The figures therefore suggest that Nigeria’s manufacturing recovery remains more about expanding output in selected industries than replacing foreign supply across the wider market.
Until domestic manufacturers can consistently capture a larger share of demand currently supplied by imports while simultaneously increasing their presence in export markets manufacturing growth alone will not translate into meaningful import substitution.
Nigeria’s overall trade surplus may be getting larger, but the manufacturing trade gap shows that the country still has a considerable distance to cover before rising factory output becomes a genuine reduction in dependence on foreign manufactured goods.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
