The Alliance for Economic Research and Ethics (AERE) has warned that the sharp decline in manufacturing tax revenue during the first quarter of 2026 reflects weakening industrial activity and called for urgent reforms to revive Nigeria’s productive sector.
In a policy brief, AERE Chairman, Dele Oye, acknowledged the Bank of Industry’s (BoI) record loan disbursement of N644.9 billion in 2025 but argued that the intervention alone is insufficient to transform the country’s manufacturing sector.
According to the report, Company Income Tax (CIT) revenue from the manufacturing sector fell by 31 per cent year-on-year to N74.48 billion in the first quarter of 2026, compared with N107.90 billion recorded during the same period in 2025. The figure also declined from N141.84 billion generated in the fourth quarter of 2025.
Oye attributed the drop to rising production costs and shrinking profit margins facing manufacturers.
He praised the Bank of Industry for supporting 1.68 million jobs and financing projects across 14 strategic sectors, describing the bank’s maiden Development Impact Report as a significant shift from measuring success by loan volumes to assessing development outcomes.
The AERE chairman also commended the Central Bank of Nigeria (CBN) for policies supporting productive sectors and lauded President Bola Tinubu for placing manufacturing at the centre of the Renewed Hope Agenda and the 2025 Nigeria Industrial Policy.
Despite these initiatives, Oye said manufacturers continue to struggle with structural challenges, including inadequate electricity supply, commercial lending rates above 35 per cent, unresolved $2.4 billion foreign exchange forward obligations, rising government domestic borrowing and limited access to affordable long-term financing.
“The manufacturing sector, which should be the engine of this transformation, is gasping. Q1 2026 has delivered a decline in manufacturing tax revenue. When manufacturers pay less tax, it is because they are producing less, selling less and slowly suffocating,” he said.
Describing the Bank of Industry’s intervention as “a drop of water in a desert of industrial thirst,” Oye noted that Nigeria must create at least four million jobs annually to keep pace with population growth while many factories continue to operate below 50 per cent of installed capacity.
He urged the Federal Government and the CBN to accelerate the implementation of the Nigeria Industrial Policy, restore tax incentives for firms operating in Free Trade Zones, strengthen the National Credit Guarantee Company, reduce fiscal deficits and domestic borrowing, cap lending rates for manufacturing, agriculture and technology at 15 per cent, deepen capital market financing and establish industrial clusters with dedicated power supply.
