Foreign investment in Nigeria’s production and manufacturing sector plunged 54 percent in the first nine months of 2025, even as overall capital inflows into the country surged by 132 percent, official data showed.
The productive sector attracted US$463.5 million between January and September 2025, down sharply from US$1.01 billion in the same period of 2024, according to figures from the National Bureau of Statistics. In contrast, total capital importation rose from US$7.23 billion in the first nine months of 2024 to US$16.78 billion in 2025.
A quarterly breakdown revealed that manufacturing received US$129.9 million in Q1 2025, $72.3 million in Q2, and US$261.4 million in Q3, compared with US$191.9 million, US$624.7 million, and US$189.2 million, respectively, in the same quarters of 2024.
Portfolio investment dominated inflows in Q3 2025, amounting to US$4.85 billion or 80.7 percent of total capital. Other investments accounted for US$864.6 million, while foreign direct investment (FDI) contributed just US$296.3 million, representing less than five percent of total inflows.
The banking and financial sectors captured the bulk of the funds, with US$3.14 billion and US$1.86 billion respectively in Q3, leaving the production and manufacturing sector with a mere US$261.4 million, or 4.35 percent of inflows for the quarter.
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Stakeholders welcomed the rise in overall capital inflows but expressed concern over weak investment in Nigeria’s real sector. Leye Kupoluyi, president of the Lagos Chamber of Commerce and Industry, said the data highlighted a recovery driven mainly by short-term financial flows rather than long-term productive investment.
“While total capital inflows surged to US$6.01 billion in Q3 2025, capital imported into the production and manufacturing sector declined by 54 percent year-on-year,” Kupoluyi said. “Investors are responding positively to attractive yields in money market instruments and bonds, but remain wary of the real sector.”
Structural weaknesses continue to deter long-term investment in factories, he added. High production costs caused by unreliable electricity, dependence on self-generated power, logistical inefficiencies, and volatile input prices have eroded profit margins. Access to foreign exchange for raw materials, policy unpredictability, and regulatory complexity further limit manufacturing investments.
The Manufacturers Association of Nigeria (MAN) warned that foreign investors’ preference for liquid financial assets over industrial projects reflects systemic challenges in the sector. MAN research shows that manufacturing’s contribution to Nigeria’s economy has fallen from 29.9 percent in 1981 to 8.2 percent in 2024, while real growth in the sector dropped from 14.7 percent in 2014 to just 1.2 percent in 2024.
The decline has had tangible consequences: 767 manufacturing companies closed in 2023, and roughly 18,000 jobs were lost in 2024, according to MAN data.
Kupoluyi said Nigeria’s success in attracting portfolio inflows reflected confidence in monetary management, easing inflation, and improved exchange rate transparency, but warned that the country must address real sector challenges to ensure sustainable growth.
“Foreign investors are signalling trust in Nigeria’s financial and banking system, but they remain cautious about committing to long-term industrial investment,” he said.
