Lagos, Nigeria – March 2026 – Nigeria’s manufacturing sector suffered a sharp decline in foreign investment in 2025, even as total capital inflows into the country more than doubled, raising concerns about industrial growth and economic diversification.
According to the National Bureau of Statistics (NBS), total capital importation surged by 131.96% year-on-year, reaching $16.78 billion between January and September 2025, up from $7.23 billion in the same period of 2024. However, foreign investment in manufacturing plummeted by 54.11%, dropping to just $463.52 million—a mere 2.76% of total inflows.
Quarterly Volatility Highlights Investor Caution
The data reveals erratic trends:
Q2 2025: $261.35 million (brief rebound)
Q3 2025: $72.25 million (steep decline)
Meanwhile, overall capital inflows remained strong, rising from $6.01 billion (Q1) to $6.24 billion (Q2) before moderating to $4.53 billion (Q3).
Why Are Investors Avoiding Manufacturing?
Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN), blamed structural bottlenecks, inflation, FX volatility, and poor infrastructure for the sector’s declining appeal.
“Foreign investors are wary of long-term manufacturing projects due to high operational risks,” he said. “Unstable power, costly logistics, port inefficiencies, and policy uncertainty make Nigeria less competitive compared to sectors with quicker returns.”
Economic Diversification at Risk
Analysts warn that Nigeria’s reliance on short-term portfolio flows (rather than productive FDI) threatens job creation and industrialization. Manufacturing is crucial for economic diversification, but dwindling investment could:
Stall expansion plans
Reduce capacity utilization
Weaken job growth
What Needs to Change?
Industry leaders urge urgent reforms:
Stabilize FX & Curb Inflation – Restore investor confidence with predictable policies.
Fix Infrastructure Gaps – Reliable power, transport, and port efficiency are critical.
Ensure Policy Consistency – Clear regulations and incentives for value-added production.
Lower Financing Costs – Affordable credit is essential for local and foreign-backed ventures.
The Bottom Line
While Nigeria attracts record capital inflows, the real challenge is channeling funds into factories—not just financial markets. Without decisive action, the manufacturing slump could deepen unemployment and stall economic transformation.