Nigeria’s manufacturing investment plunges 46% in 2025

Nigeria’s capital importation into the manufacturing sector has suffered a sharp decline in 2025, underscoring the country’s worsening business environment and investor sentiment towards the industry.

Foreign investments in the sector declined 46 percent from $1.43 billion in 2024 to $773 million in 2025, according to data from the National Bureau of Statistics (NBS).

The sector’s share of total capital importation also weakened significantly to 3.3 percent in 2025 from 11.6 percent in 2024. This decline occurred despite the country recording a surge in overall foreign direct investments for the period.

Manufacturers attribute this sharp decline to the worsening business environment in the country, saying that the decline raises questions about investors’ sentiment towards the sector.

They added that the country’s huge infrastructure gaps are also increasing the burden of doing business in Africa’s most populous country.

Frank Ike Onyebu, former chairman of Manufacturers Association of Nigeria (MAN), Apapa branch, attributed the decline to the worsening business environment in the country.

Onyebu noted that, despite the stability in the foreign exchange market, which has brought some respite for manufacturers, all other operational costs have continued to surge.

“Production costs continue to surge from raw materials to power and logistics. All these are stifling the country’s manufacturing and business environment,” he noted.

According to him, the country needs a conducive business environment and deliberate policies to attract more foreign direct investments into the manufacturing sector.

He urged the government to work with the manufacturer association to enact policies for the sector, saying that the country needs jobs from the sector to drive sustainable growth.

The availability of adequate infrastructure is a major determinant of the success of every country’s industrial sector.

However, Nigeria lacks the necessary infrastructure needed to scale businesses, especially developed transport systems such as roads and rail that are connected to the nation’s seaports.

Energy, a key element of the production process, is grossly lacking as factories rely on diesel to power operations.

According to experts, the country’s inability to supply and distribute sufficient electricity has left businesses at the mercy of generators that consume diesel and petrol.

Manufacturers spend 40 percent of their total production cost on generating energy for their businesses, according to MAN.

Real growth in the sector was 1.41 percent in 2025, marginally higher than the 1.20 percent recorded in 2024. However, the modest growth was insufficient to prevent a drop in its overall share of the economy.

The sector contributed 7.40 percent to GDP in the fourth quarter of 2025, down from 7.62 percent in the corresponding period of 2024.