Nigeria’s industry sector staged a dramatic rebound in the second quarter of 2025, outpacing services for the first time since the Gross Domestic Product (GDP) rebasing in Q1 2024. It also posted its highest growth in at least 18 months, according to Finance in Africa analysis of the new National Bureau of Statistics data.
Real growth in the sector more than doubled to 7.45% in Q2 from 3.42% in Q1, and was up 3.73 percentage points year-on-year. Despite the surge, industry still contributed the smallest share of GDP at 17.31%, compared with agriculture’s 26.17% and services’ 56.53%, as the overall economy grew 4.11% in real terms.
“In effect, the stronger GDP growth in Q2 was a result of a combination of rising oil production, steady resilience across key non-oil activities, and rebasing exercise that more accurately reflects the shifts in Nigeria’s economic structure,” analysts at Comercio Partners Research said in a report on Tuesday.
They added that this combination highlights both cyclical recovery in the oil market and deeper structural transitions toward services and digital-driven growth.
“The higher aggregate GDP numbers, therefore, capture not just increases in sectoral activity but also the effect of a statistical update that aligns Nigeria’s output structure with the modern economy.”
Services retained its position as the largest contributor to GDP but grew more slowly, at 3.94% in Q2 from 4.33% in Q1, while agriculture improved to 2.82% from near-stagnation at 0.07% in the previous quarter.
The industry upturn reflects renewed strength in crude oil output, coal mining, quarrying and a modest recovery in refining, even as manufacturing continues to lag. It underscores how quickly oil and non-oil activities can reshape Nigeria’s growth trajectory when aligned.
“The refinery has been a game-changer,” said Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE). “That sector was in recession for years. With Dangote Refinery coming on stream, production has risen sharply, supplying the domestic market and even enabling exports. That’s a major turnaround.”
Oil leads the charge
The oil sector’s resurgence was the defining feature of Q2. Real growth surged to 20.46%, up from 1.87% in Q1 and 10.08% a year earlier. Average daily crude production rose to 1.68 million barrels per day (mbpd) from 1.62 mbpd in Q1 and 1.41 mbpd in Q2 last year. The sector’s contribution to real GDP grew to 4.05% from 3.51%.
Mining and quarrying as a whole expanded to 20.86%, compared with 7.51% in Q2 2024 and 1.87% in Q1 2025. Coal mining jumped 57.53% after three quarters of decline, quarrying grew 45.86%, while metal ores contracted 6.96%.
Together, these activities raised the sector’s GDP share to 4.23% from 3.64% a year earlier.
Refining and manufacturing diverge
Oil refining exited a long recession in Q4 2024, expanding 9.36%, and has since sustained double-digit growth, reaching 15.78% in Q2 as Dangote’s facility ramps up. Cement also posted steady growth of 4.86%, while food, beverage, and tobacco grew to 2.15% as a result of easing inflationary pressures since April.
In contrast, textiles shrank 1.32% and motor vehicles and assembly contracted 1.50%, reflecting import dependence and weak consumer demand. Chemicals and pharmaceuticals rose 3.70% on stronger local demand.
Manufacturing as a whole remains sluggish. Real growth was 1.60% in Q2, down from 1.69% in Q1, with its GDP share slipping to 7.81% from 8.01% a year earlier and 9.62% in Q1 2025. Nominal growth slowed sharply to 4.51% from an inflated 42.40% in Q1.
High energy costs, exchange-rate volatility, borrowing costs, and weak domestic demand continue to weigh on the sector.
Last month, Finance in Africa reported that foreign capital inflows to manufacturing fell to $129.9 million in Q1, the weakest since Q3 2022, as investors shift funds to other industries. The subsector’s share of inflows dropped to 2.3% from 3.8% in Q4 and 5.7% a year ago.
Aliyu Ilias, CEO of CSA Advisory, blamed macroeconomic conditions. “At a Monetary Policy Rate of 27.5%, borrowing is prohibitively expensive. FX instability also makes repatriation difficult, reducing investment appeal,” he said.
Why the rebound matters
A stronger oil sector boosts Nigeria’s foreign exchange earnings, stabilises reserves, and improves fiscal space. Coal and quarrying’s revival broadens the mining base, while refining growth signals progress toward reducing imported fuel dependence.
Yet manufacturing’s weakness underscores unresolved structural issues in power supply, logistics and credit access.
“Export-oriented sectors are doing well,” Yusuf of CPPE said, noting that reforms have helped mining too. “But manufacturing remains sluggish — textiles are still in recession, and vehicle assembly has contracted. These reflect deep-seated structural challenges that policy must address.”
He also highlighted a rebound in air transport, which grew 6.34% in Q2 after years of recession, but warned that agriculture’s 2.82% growth remains too low for such a critical sector.
“Government must generate more momentum in agriculture to drive food security, jobs, and rural incomes.”
Despite the industry’s headline surge, economic structure in Africa’s most populous nation remains largely unchanged: agriculture 26.17%, industry 17.31% and services 56.53% of GDP.
The non-oil economy accounted for 95.95% of GDP, with oil at just 4.05%. Sustained productivity gains outside oil will be key to creating quality jobs and raising revenue.
