By George OPARA
Nigeria’s manufacturing sector has generated ₦329.59 billion in Value Added Tax (VAT) revenue in the first quarter of 2026, strengthening its position as one of the country’s most significant sources of non-oil tax revenue while its overall contribution to Nigeria’s total Gross Domestic Product (GDP) decreased relative to other sectors.
Data released by the National Bureau of Statistics (NBS) indicated that VAT revenue from manufacturing activities made an uptick from ₦286.95 billion recorded in the corresponding period of 2025. The Q1 2026 performance also exceeded the sector’s quarterly VAT contributions throughout 2025, underscoring its resilience amid a challenging operating environment.
The development comes as Nigeria’s economy expanded by 3.89 percent year-on-year in the first quarter of 2026, with manufacturing accounting for 9.57 percent of real Gross Domestic Product (GDP).
VAT receipts from the sector have remained robust over the past five quarters, reflecting sustained production levels, consumer demand and growing formal sector activity. Manufacturing VAT collections stood at ₦286.95 billion in Q1 2025 before rising to ₦297.68 billion in Q2. Collections moderated slightly to ₦290.79 billion in Q3 and increased to ₦292.12 billion in Q4 2025. The latest Q1 2026 figure represents a 14.86 percent increase from the corresponding period last year.
However, the overall, the manufacturing sector contributed ₦1.17 trillion in VAT revenue in 2025, up sharply from ₦803.53 billion recorded in 2024, highlighting its growing importance to government revenue generation.
Amid the growth in tax contributions, manufacturing’s share of real GDP slipped slightly to 9.57 percent in Q1 2026 from 9.62 percent in the same period of 2025.
But the figure represents a substantial recovery from the 7.4 percent recorded in the fourth quarter of 2025.
Economic analysts say increase VAT receipts could be connected to stronger consumer spending, improved tax compliance and increased formalisation of economic activities.
Nonetheless, manufacturers have continued to struggle with high energy costs, foreign exchange pressures, infrastructure gaps and elevated borrowing costs, factors that could impact on future growth prospects.
Yet, as production and retail costs rise, the 7.5% VAT is applied to a higher final price, boosting government revenues even if real production output remains modest.
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