Nigeria’s manufacturing sector contributed N329.59 billion in Value Added Tax (VAT) revenue in the first quarter of 2026, maintaining its position as one of the country’s largest sources of non-oil tax receipts despite a slight decline in its share of economic output.

Data from the National Bureau of Statistics (NBS) showed that VAT generated from manufacturing activities increased from N286.95 billion recorded in the corresponding period of 2025 and surpassed the quarterly contributions posted throughout last year.

The latest performance comes as Nigeria’s economy expanded by 3.89% year-on-year in the first quarter of 2026, while the manufacturing sector accounted for 9.57% of real Gross Domestic Product (GDP).

What the data is saying

Manufacturing VAT collections have remained resilient over the past five quarters, reflecting sustained production and consumption activities across the sector.

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  • Manufacturing VAT stood at N286.95 billion in Q1 2025.
  • Collections increased to N297.68 billion in Q2 2025 and N290.79 billion in Q3 2025.
  • The sector generated N292.12 billion in Q4 2025 before rising to N329.59 billion in Q1 2026.

Total VAT contributions from the manufacturing sector reached N1.17 trillion in 2025, compared with N803.53 billion recorded in 2024.

The Q1 2026 figure represents an increase of about 14.86% compared to the N286.95 billion generated in the corresponding quarter of 2025.

The data highlights the manufacturing sector’s continued importance to Nigeria’s tax revenue base despite prevailing economic challenges.

Get up to speed

While VAT collections from manufacturing increased, the sector’s contribution to the overall economy recorded a slight year-on-year decline.

  • According to the NBS, manufacturing contributed 9.57% to Nigeria’s real GDP in Q1 2026.
  • This was marginally lower than the 9.62% recorded in Q1 2025.
  • However, it represented a significant improvement from the 7.4% contribution posted in the fourth quarter of 2025.
  • Nigeria’s overall economy grew by 3.89% year-on-year during the review period.

The increase in VAT receipts may also reflect stronger consumer demand, improved tax compliance and the expansion of formal sector activities.

What you should know

Nigeria has continued to prioritise manufacturing as part of broader efforts to diversify the economy away from oil dependence.

  • The sector remains one of the largest contributors to non-oil GDP and government tax revenue.
  • Manufacturers continue to face challenges including high energy costs, foreign exchange constraints, infrastructure deficits and elevated borrowing costs.

Recent policy reforms aimed at improving the business environment and enhancing access to finance are expected to support industrial growth.

Recently, the Centre for the Promotion of Private Enterprise (CPPE) has warned that Nigeria’s economy cannot achieve durable structural transformation without a stronger manufacturing base.

The CPPE expressed concern over the 15.30% contraction recorded in the electricity and gas sector, describing it as the sharpest decline in recent years.

According to the organisation, the decline reflects persistent structural weaknesses across power generation, transmission, distribution, sector liquidity, and governance.