Foreign Investment Trends in Nigeria’s Manufacturing Sector
Foreign investment into Nigeria’s production and manufacturing sector has seen a significant decline, despite an overall surge in capital importation. The data highlights a complex economic landscape where short-term financial flows are outpacing long-term industrial investments.
Decline in Manufacturing Inflows
In the first nine months of 2025, foreign investment into Nigeria’s production and manufacturing sector dropped by 54.11 per cent. This marked a sharp decrease from $1.01bn recorded in the same period of 2024 to $463.52m in 2025. The National Bureau of Statistics reported these figures, indicating a troubling trend for the manufacturing sector.
The quarterly breakdown showed that the manufacturing sector received $129.92m in Q1 2025, $72.25m in Q2, and $261.35m in Q3. This contrasts with the previous year’s figures of $191.92m in Q1 2024, a significant spike of $624.71m in Q2 2024, and $189.22m in Q3 2024.
Despite this decline, total capital importation into Nigeria rose dramatically, increasing from $7.23bn in the first nine months of 2024 to $16.78bn in the same period of 2025. The quarterly inflows were $5.64bn in Q1 2025, $5.12bn in Q2, and $6.01bn in Q3, bringing the nine-month total to $16.78bn. In contrast, Nigeria recorded $3.38bn in Q1 2024, $2.60bn in Q2, and $1.25bn in Q3, totaling $7.23bn.
Composition of Inflows
In Q3 2025 alone, capital importation surged by 380.16 per cent to $6.01bn from $1.25bn in Q3 2024, and increased by 17.46 per cent from $5.12bn in Q2 2025. A closer look at the composition of inflows revealed that Portfolio Investment dominated with $4.85bn, accounting for 80.70 per cent of total capital imported in Q3 2025. Other Investment accounted for $864.57m or 14.37 per cent, while Foreign Direct Investment trailed with $296.25m, representing just 4.93 per cent.
Sectoral analysis showed that the banking sector attracted $3.14bn or 52.25 per cent of total inflows in Q3 2025, followed by financing with $1.86bn or 30.85 per cent. Production and manufacturing accounted for only $261.35m, representing 4.35 per cent.
Stakeholder Concerns
Stakeholders have expressed concerns about the continued weak inflows into the productive and manufacturing sectors. They warned that global investors remain risk-averse to Nigeria’s real sector. Leye Kupoluyi, President of the Lagos Chamber of Commerce and Industry (LCCI), noted that the recovery is driven mainly by short-term financial flows rather than long-term productive investment.
Kupoluyi highlighted that while total capital inflows surged to $6.01bn in Q3 2025, capital imported into the production and manufacturing sector declined by 54.11 per cent year-on-year to $463.52m from $1.01bn. He pointed out that investors responded positively to monetary reforms and attractive yields in money market instruments and bonds but remained wary of the real sector.
Structural weaknesses continue to deter long-term factory investments. High production costs driven by unreliable electricity, dependence on self-generated power, logistics inefficiencies, and volatile input prices erode profit margins. Additionally, foreign manufacturers face challenges around access to foreign exchange for raw materials, policy unpredictability, and regulatory complexity.
Impact on Manufacturing Sector
The Manufacturers Association of Nigeria (MAN) has raised concerns about the challenges facing the manufacturing sector. Recent research from MAN connected the decrease in FDI inflows to the historical decline in the local viability of the manufacturing sector. According to the MAN 2025 Think Tank, the sector’s contribution to the economy has declined significantly from 29.9 per cent in 1981 to 8.2 per cent in 2024, with its real growth declining from 14.7 per cent in 2014 to 1.2 per cent in 2024.
The group also reported that 767 manufacturing companies had shut down as of 2023, resulting in about 18,000 job losses in the sector in 2024.
Infrastructure Challenges
Segun Kuti-George, National Vice President of the National Association of Small-Scale Industrialists, blamed the sharp decline in manufacturing inflows on infrastructure deficits estimated at $13tn. He cited power shortages and weak transport networks as major constraints, noting that over 50 per cent of agricultural harvests don’t make it to the market due to poor road infrastructure.
Investors prefer trading and financial assets over long-term manufacturing commitments. Kuti-George emphasized that while large amounts of capital are brought into the country, they are not invested in manufacturing, leading to a preference for trading or investing in properties.
Policy Initiatives
Analysts warn that the surge in portfolio inflows provides macroeconomic relief but risks building an economy stabilized by volatile financial flows without deepening the industrial base. On Tuesday, the Federal Government launched the Nigeria Industrial Policy 2025, which aims to increase the manufacturing contribution to Nigeria’s GDP to 15 per cent by 2030 and 25 per cent by 2035.
