Foreign investment in manufacturing plunges 51.44% in two years

Foreign investment in flows into Nigeria’s manufacturing sector have suffered a sharp decline over the past two years, underscoring weakening investor confidence in the country’s real sector despite a surge in overall capital importation.

Data obtained from the National Bureau of Statistics (NBS) show that capital importation into the Production/Manufacturing sector fell by 51.44 per cent to $772.45 million in 2025, down from $1.59 billion recorded in 2023.

The figures also indicate a steady year-on-year decline, with inflows dropping from $1.59 billion in 2023 to $1.43 billion in 2024 before plunging further in 2025.

The sector’s share of total capital importation has also weakened significantly, falling from a dominant 49.73 per cent in 2023 to 11.58 per cent in 2024, and further to just 3.33 per cent in 2025 — a development analysts describe as a major structural shift in foreign investment patterns.

Ironically, the decline in manufacturing investment comes amid a surge in total capital importation into the economy.

According to the NBS data, total inflows rose sharply from $3.91 billion in 2023 to $12.32 billion in 2024, and nearly doubled again to $23.22 billion in 2025.

This widening disconnect highlights a growing preference among foreign investors for short-term financial instruments over long-term productive investments such as manufacturing.

Capital importation measures inflows of foreign funds for investment, trade, and production activities, and is a key indicator of investor confidence and economic attractiveness.

A breakdown of fourth quarter (Q4) 2025 data further reinforces this trend.

Total capital importation stood at $6.44 billion in Q4 2025, representing a 26.61 per cent increase compared to $5.09 billion recorded in the corresponding period of 2024.  On a quarter-on-quarter basis, inflows rose by 7.13 per cent from $6.01 billion in Q3 2025.

However, the bulk of these inflows were portfolio investments, which accounted for $5.49 billion or 85.14 per cent of total capital imported during the quarter. Other investments contributed $599.65 million (9.31 per cent), while Foreign Direct Investment (FDI) lagged significantly at $357.80 million, representing just 5.55 per cent.

Sectoral distribution shows that the banking sector attracted the highest inflow at $3.85 billion (59.75 per cent), followed by the financing sector with $1.94 billion (30.15 per cent). In contrast, the production/manufacturing sector recorded a modest $308.93 million, accounting for only 4.79 per cent.

Analysts warn that the sharp decline in manufacturing investment raises concerns about Nigeria’s industrialisation prospects, particularly at a time when the country is seeking to diversify away from oil and boost local production