Nigerian manufacturers invested a record N4.54tn in the economy in 2025, but finished goods valued at about N2.12tn remained unsold as weak consumer purchasing power continued to weigh on demand.

Data from the Manufacturers Association of Nigeria showed that total manufacturing investment increased by 59 per cent from N2.85tn recorded in 2024, reflecting a significant rise in capital expenditure despite challenging operating conditions.

Investment in plants and machinery accounted for more than half of the total, reaching N2.47tn during the year.

The food, beverage and tobacco sector attracted the largest investment at N1.30tn, followed by the non-metallic mineral products sector with N960.44bn.

However, the sharp increase in nominal investment partly reflected the impact of inflation on the cost of machinery, equipment and other capital expenditure.

When adjusted for inflation, manufacturers’ total investment stood at N1.33tn in 2025, substantially below the nominal N4.54tn figure.

Real investment in plants and machinery increased by only 3.1 per cent to N349.17bn, indicating that the strong growth in nominal spending did not translate into a comparable increase in the volume of productive assets acquired.

Nominal investment measures expenditure at prevailing prices, while real investment adjusts for inflation to provide a clearer picture of changes in actual investment activity.

Unsold Goods Reach N2.12tn

While manufacturers increased investment, the sector continued to face significant inventory pressure, with unsold finished goods valued at approximately N2.12tn in 2025.

The figure was marginally lower than the N2.14tn recorded in 2024 but remained elevated, highlighting persistent weakness in consumer demand.

MAN Director-General Segun Ajayi-Kadir attributed the high inventory levels partly to pressure on household purchasing power.

“The Food, Beverage & Tobacco Sectoral Group remained the most heavily impacted, accounting for over 35 per cent of the total inventory at N755.8bn,” Ajayi-Kadir said.

He added that the high inventory levels recorded during the year were driven by the squeeze on Nigeria’s middle class.

The figures suggest that increased production capacity is not necessarily translating into stronger sales, creating additional challenges for manufacturers already dealing with elevated production and financing costs.

Economist and consultant Nonso Iheoma said rising inventories could leave more manufacturers’ capital tied up in finished products rather than being converted into cash and reinvested in their operations.

He noted that companies may consequently become more dependent on bank credit and other short-term financing while also bearing higher warehousing and inventory-management costs.

Inflation Squeezes Consumer Purchasing Power

Manufacturers faced a difficult consumer environment in 2025 as elevated inflation continued to erode household purchasing power.

Nigeria’s average headline inflation rate stood at 23.33 per cent during the year, based on the rebased Consumer Price Index series used by the National Bureau of Statistics.

Higher living costs forced many households to prioritise essential spending, placing pressure on demand for manufactured products.

The national average cost of preparing a standard pot of jollof rice for a family of five, for example, was estimated at N25,486 in October 2025, according to the SBM Jollof Index.

The combination of high inflation and weaker household purchasing power has created a difficult operating environment in which manufacturers are expanding capacity while facing challenges selling finished products at prices capable of covering rising production costs.

Manufacturing Critical to Economic Growth

Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, stressed the importance of manufacturing to Nigeria’s long-term economic development.

“The future of economic prosperity lies not in what Nigeria imports, but in what Nigeria produces,” Yusuf said.

He described manufacturing as a critical link between Nigeria’s natural resources and broad-based economic prosperity, arguing that stronger industrial capacity would be essential to achieving sustainable economic transformation.

MAN Seeks Tax Credits, Cheaper Financing

To encourage further investment and reduce operating costs, MAN proposed a series of policy measures aimed at strengthening the manufacturing sector.

The association called on the Federal Government to introduce a 30 per cent Green Investment tax credit for manufacturers transitioning to off-grid renewable energy or hybrid captive power solutions such as solar and liquefied natural gas.

It also recommended that the Nigerian Electricity Regulatory Commission prioritise Eligible Customer status for industrial clusters, allowing manufacturers to purchase electricity directly from generation companies through dedicated feeders.

MAN further proposed an expansion of the Bank of Industry intervention fund to enable manufacturers to refinance high-interest commercial bank loans at fixed interest rates of between seven and nine per cent for a minimum of 10 years.

The association also called for the Nigeria Industrial Policy to be enacted into law, which it said would make industrial targets and incentives more predictable and reduce the risk of abrupt policy changes.

Beyond measures targeted directly at manufacturers, MAN urged the government to pursue policies that increase household incomes and improve consumers’ ability to purchase locally manufactured goods.

The 2025 figures highlight a widening challenge for Nigeria’s manufacturing industry: companies are committing significantly more capital to production capacity, but sustained growth will increasingly depend on whether domestic and international markets can absorb the additional output.