The Manufacturers Association of Nigeria has expressed concern that investors are avoiding long-term production commitments in the country, as the manufacturing sector suffered a 54.11 per cent plunge in foreign investment in the first nine months of 2025, despite a sharp rise in overall capital importation.
Data from the National Bureau of Statistics showed that capital imported into the production and manufacturing sector decreased to $463.52m in the first nine months of 2025 from $1.01bn recorded in the corresponding period of 2024.
However, total capital importation into Nigeria surged 131.96 per cent to $16.78bn in the nine months of 2025, compared to $7.23bn in the same period of 2024.
A breakdown of the NBS data showed that the manufacturing sector attracted $129.92m in Q1 2025, $72.25m in Q2, and $261.35m in Q3, bringing the total to $463.52m.
By contrast, the sector drew $191.92m in Q1 2024, $624.71m in Q2, and $189.22m in Q3, totalling $1.01bn.
In Q3 2025 alone, total capital importation stood at $6.01bn, representing a 380.16 per cent increase from $1.25bn recorded in Q3 2024 and a 17.46 per cent rise from Q2 2025. Portfolio investment dominated inflows in Q3 2025 with $4.85bn, accounting for 80.70 per cent, while Foreign Direct Investment contributed just $296.25m, or 4.93 per cent.
The banking sector recorded the highest inflow at $3.14bn in Q3 2025, followed by the financing sector with $1.86bn, while production and manufacturing accounted for only $261.35m, representing 4.35 per cent.
In an interview with The PUNCH, the Director-General of MAN, Segun Ajayi-Kadir, said the decline reflected foreign investors’ lack of confidence in Nigeria’s manufacturing environment.
He said, “The Nigerian manufacturing sector’s ecosystem is not encouraging for investment due to persistent headwinds in the production environment. The foreign investors are wary of long-term manufacturing commitments in the country due to production cost risk, macroeconomic uncertainty, infrastructural deficiency, double-digit interest rates and limited market linkages.”
He added that as a result of the itemised challenges, the sector is currently exhibiting a low growth rate, contributing less to GDP; low capital utilisation; and a share of exports, which are “signs of weak competitiveness and underutilisation of potential”.
Ajayi-Kadir noted that although Nigeria has a large domestic market and abundant mineral and agricultural resources, structural, policy, and economic constraints have continued to discourage expansion and fresh investment.
“Foreign investors are discouraged and lose confidence in the manufacturing sector because of the severe structural and cost challenges but prefer investment in sectors that are less exposed to Nigeria’s operational risks,” he stressed.
Explaining the year-on-year drop, MAN’s DG said investment in manufacturing depends on a favourable production environment driven by stable policies, reliable infrastructure, and accessible financing.
“The recent capital importation report revealed a fall in investment into the productive/manufacturing sector. This confirmed that the environment is not conducive to production; the consistency of macroeconomic instability, structural bottlenecks, and policy uncertainty has been hindering the performance of the sector, destabilising existing investment and discouraging new entrants,” he said.
Ajayi-Kadir listed foreign exchange instability, high inflation, rising input costs, unreliable electricity supply, poor road networks, inefficient ports, policy inconsistency, regulatory uncertainty, and security challenges as major deterrents.
Meanwhile, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the sectoral distribution of capital inflows exposed structural weaknesses in the economy.
He explained: “Sectoral analysis of the capital importation data shows that the bulk of inflows went into the banking and financial sectors, with only marginal allocation to manufacturing, infrastructure, and other productive activities.
“This pattern underscores a persistent structural weakness: rising capital importation is not yet translating into meaningful expansion of productive capacity. Without stronger capital flows into industry, agro-processing, logistics, energy, and export-orientated manufacturing, the broader economy will see limited gains in employment, productivity, and inclusive growth.”
Yusuf warned that financial deepening without real-sector expansion could create a liquidity-driven recovery that fails to transform Nigeria’s productive base.
He urged the government to convert portfolio-driven inflows into foreign direct investment-led industrial expansion by prioritising reliable electricity, efficient transport and logistics systems, predictable regulations, and improved contract enforcement.
“Government must also deliberately incentivise capital flows into export-orientated manufacturing, agro-processing, mineral beneficiation, industrial parks, and infrastructure development. Without such policy direction, foreign capital will remain concentrated in short-term financial instruments rather than real economic assets,” Yusuf remarked.
