Binding constraints slow manufacturing growth at 1.25% in Q3’25

By Yinka Kolawole

Binding constraints have continued to slow down the growth of the manufacturing sector, with the sector recording a growth of 1.25 percent in the third quarter of 2025 (Q3’25), according to the latest Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS).

Analysis of the Q3’25 GDP report revealed that the textile and apparel as well as the paper and pulp subsectors helped to drag down the sector, with the textile and apparel subsector still in recession, contracting by 2.41 percent, mainly due to high production costs and smuggling, while the paper and pulp subsector also contracted by 1.07 percent.

The manufacturing sector is comprised of thirteen activities: Oil Refining; Cement; Food, Beverages and Tobacco; Textile, Apparel, and Footwear; Wood and Wood products; Pulp Paper and Paper products; Chemical and Pharmaceutical products; Non-metallic Products, Plastic and Rubber products; Electrical and Electronic; Basic Metal and Iron and Steel; Motor Vehicles and Assembly; and Other Manufacturing.

According to the NBS report, real GDP growth in the manufacturing sector in Q3’25 was 1.25% (year-on-year), higher than the same quarter of 2024 and lower than the preceding quarter by 0.49% points and 0.34% points respectively. The growth rate of the sector on a quarter-on-quarter basis stood at 8.65%.

The real contribution to GDP in the 2025 third quarter was 7.62%, lower than the 7.82% recorded in the third quarter of 2024 and lower than the 7.81% recorded in the second quarter of 2025.

Commenting on the report, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, noted that the manufacturing sector, which expanded by 1.25 percent, recorded one of the weakest performances across major sectors due to persistent challenges such as high energy and logistics costs; costly borrowing conditions; dependence on imported industrial inputs; and smuggling of competing products.

He said: “These structural weaknesses continue to erode competitiveness and limit job creation.

“To consolidate the gains recorded in Q3 and unlock stronger, more inclusive growth, the following policy interventions are critical: Address energy supply constraints, reduce logistics costs, improve port efficiency, and accelerate transport infrastructure development; Implement targeted social interventions and remove structural impediments that elevate consumer prices; Expand access to concessionary credit, curb smuggling, reduce import duties on industrial inputs, ease logistics challenges and address supply chain pressures, amongst others.”

Yusuf further stated: “Nigeria’s Q3 GDP performance reaffirms that the economy is on a gradual but steady recovery path, supported by improved macroeconomic stability, stronger investor sentiment, and resilience across key sectors such as services, ICT, financial services, chemical and pharmaceutical and construction.

“However, achieving higher, more inclusive and sustainable growth will require tackling long-standing structural constraints – especially in agriculture, manufacturing, and trade. Targeted policies to ease cost-of-living pressures are crucial to making the reform process inclusive.

“With continued reforms, targeted investments, and strengthened governance, Nigeria is well-positioned to deliver stronger economic outcomes in the months ahead.”

The post Binding constraints slow manufacturing growth at 1.25% in Q3’25 appeared first on Vanguard News.

Advertisement