Nigerian manufacturers invested a record N4.54tn in the economy in 2025, representing a 59 per cent increase from the N2.85tn recorded in 2024. This significant expansion in capital commitments was led by the food, beverage and tobacco sector, which accounted for N1.30tn in investments. Despite this growth, the sector faced challenges due to high inflation, which eroded consumer purchasing power and led to a substantial buildup of unsold goods.
The Manufacturers Association of Nigeria reported that the total value of unsold finished goods reached approximately N2.12tn in 2025. Economists attribute this inventory pressure to weak consumer demand, which has constrained manufacturers' ability to sell their output at prices that cover rising production costs. As a result, businesses face pressure on their working capital, and firms may have to rely more heavily on bank credit or short-term financing to fund operations.
The impact of inflation on the manufacturing sector was evident in the real investment figures, which stood at N1.33tn in 2025, substantially below the N4.54tn nominal figure. Real investment in plants and machinery increased by just 3.1 per cent to N349.17bn, indicating that the sharp rise in nominal investment did not translate into a comparable increase in the volume of productive assets acquired.
According to Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria, the high inventory levels for 2025 are occasioned by the squeeze on the Nigerian middle class. The Food, Beverage & Tobacco Sectoral Group remained the most heavily impacted, accounting for over 35 per cent of the total inventory at N755.8bn. This persistent crisis in consumer purchasing power has significant implications for the sector.
The average headline inflation rate in Nigeria was 23.33 per cent in 2025, based on the rebased Consumer Price Index series used by the National Bureau of Statistics. This high inflation rate eroded people's purchasing power, making goods expensive and unaffordable for many. The national average cost of cooking a standard pot of jollof rice for a family of five was approximately N25,486 in October 2025.
Economists and industry experts have called for measures to encourage more investments in the sector and address the challenges facing manufacturers. The Manufacturers Association of Nigeria suggested providing a 30 per cent Green Investment tax credit for manufacturers who transition to off-grid renewable energy or hybrid captive power solutions. They also urged the government to mandate the Nigerian Electricity Regulatory Commission to prioritise Eligible Customer status for industrial clusters.
Dr Muda Yusuf, Chief Executive Officer of the Centre for Promotion of Private Enterprise, emphasized that industrialisation is crucial for economic sovereignty, sustainable prosperity, and national competitiveness. He noted that manufacturing remains the bridge between natural resource wealth and broad-based prosperity, and that strengthening this bridge is essential for achieving economic transformation.
Key points
- Nigerian manufacturers invested N4.54tn in 2025, but struggled with N2.12tn worth of unsold goods due to weak consumer demand and high inflation.
- The sector faces significant challenges, including pressure on working capital and the need for more investments in infrastructure and incentives.
- Industry experts call for measures to address these challenges and encourage more investments in the sector, including tax credits and prioritising Eligible Customer status for industrial clusters.
