A sharp drop in manufacturing tax revenue during the first quarter of 2026 has sounded alarm bells for the Alliance for Economic Research and Ethics, with the group warning that the numbers point to a manufacturing sector losing steam despite government efforts to prop it up. AERE Chairman Dele Oye laid out the concerns in a policy brief, calling on both the Federal Government and the Central Bank of Nigeria to pursue deeper structural reforms before the situation worsens.
The figures behind the warning are stark. Company Income Tax revenue from manufacturing fell 31 percent year-on-year, dropping to N74.48 billion in Q1 2026 from N107.90 billion during the same period in 2025. The decline looks even steeper when measured against the previous quarter, when the sector generated N141.84 billion in Q4 2025. Oye attributed the slide to a combination of climbing production costs and shrinking profit margins squeezing manufacturers from multiple directions.
Oye did not ignore the positive steps taken so far. He acknowledged the Bank of Industry’s record N644.9 billion in loan disbursements during 2025, crediting the institution with supporting 1.68 million jobs and financing projects spanning 14 strategic sectors. He singled out BoI’s first Development Impact Report as a meaningful shift in approach, moving away from simply counting loan volumes toward measuring actual development outcomes. Still, he was blunt in his assessment that this support, however commendable, falls short of what the sector actually needs.
He extended similar recognition to the Central Bank for policies aimed at supporting productive sectors, and to President Bola Tinubu for positioning manufacturing as a central pillar of both the Renewed Hope Agenda and the 2025 Nigeria Industrial Policy. But recognition of good intentions did not stop Oye from cataloguing the structural problems still weighing manufacturers down, from chronic power shortages and commercial lending rates exceeding 35 percent to unresolved foreign exchange forward obligations totaling $2.4 billion, rising domestic government borrowing and a persistent shortage of affordable long-term financing options.
His language grew more urgent when describing the sector’s current state, warning that an industry meant to drive economic transformation is instead struggling to stay afloat. He connected the falling tax revenue directly to reduced production and sales, framing it as evidence that manufacturers are being slowly squeezed out. He was similarly pointed in his assessment of BoI’s intervention, calling it insufficient relative to the scale of need, especially given that Nigeria must generate at least four million jobs annually just to keep pace with population growth, all while many factories continue operating below half of their installed capacity.
To reverse the trend, Oye outlined a series of recommendations, including faster implementation of the Nigeria Industrial Policy, restoring tax incentives for companies operating in Free Trade Zones, strengthening the National Credit Guarantee Company, reducing fiscal deficits and domestic borrowing, capping lending rates at 15 percent for manufacturing, agriculture and technology sectors, expanding capital market funding options and building industrial clusters with dedicated, reliable power supply.
