Despite significant challenges, Nigeria’s manufacturing sector contributed over N626.21 billion in tax revenue during the first half of 2024 (H1’24). This sum includes N265.143 billion from Company Income Tax (CIT) and N361.063 billion from Value Added Tax (VAT).
Manufacturers in Nigeria have been grappling with high production costs, poor infrastructure, limited access to funds, fuel subsidy removal, naira devaluation, increased electricity tariffs, and high inflation rates. Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, highlighted that 767 manufacturing companies shut down in 2023, and 335 others faced distress due to these multidimensional challenges.
Despite these adversities, the National Bureau of Statistics (NBS) reports a 3.21 percent year-on-year increase in tax collections from the manufacturing sector compared to H1 2023. The sector’s tax contributions also saw a 4.70 percent rise from the second half of 2023.
In Q2 2024, the manufacturing sector was the largest VAT contributor and the second-highest CIT contributor, following the Financial and Insurance sector. The sector accounted for 8.99% of total CIT and 11.78% of total VAT in Q2 2024.
However, the sector’s growth is in decline. The Q2 2024 GDP report shows manufacturing sector growth dropped to 1.28% from 2.2% in Q2 2023 and 1.5% in Q1 2024. Additionally, its real contribution to GDP decreased to 8.46% from 8.62% in Q2 2023 and 9.98% in Q1 2024, reflecting ongoing struggles amidst a challenging economic environment.