Nigeria’s manufacturers increased their investment in production capacity to N4.54tn in 2025, even as weak consumer demand left finished goods valued at about N2.12tn sitting in warehouses, fresh data from the Manufacturers Association of Nigeria (MAN) has shown.
The figures capture a difficult contradiction facing the industrial sector: manufacturers are committing more money to production despite a market increasingly constrained by declining household purchasing power.
MAN’s data showed that the N4.54tn investment recorded in 2025 was 59 per cent higher than the N2.85tn invested in 2024.
A significant portion of the investment went into plants and machinery, which accounted for N2.47tn of the total nominal investment.
The Food, Beverage and Tobacco sector attracted the largest investment of N1.30tn, while the Non-Metallic Mineral Products sector followed with N960.44bn.
But the nominal increase in investment needs to be viewed against the backdrop of Nigeria’s high inflation during the period.
When adjusted for inflation, manufacturers’ investment was N1.33tn in 2025, indicating a much smaller expansion in real terms than the headline figure suggests.
Real investment in plants and machinery increased by only 3.1 per cent to N349.17bn.
The divergence between nominal and real investment means that much of the increase in the naira value of capital expenditure reflected higher prices rather than a proportionate increase in the physical volume of machinery and other productive assets acquired.
At the same time, manufacturers faced a growing problem on the demand side.
Factories produce, consumers hold back
The N2.12tn worth of unsold finished products recorded in 2025 points to the extent to which manufacturers struggled to convert production into revenue.
Although the figure represented a marginal 1.18 per cent decline from the N2.14tn recorded in 2024, the inventory level remained substantial.
MAN Director-General, Segun Ajayi-Kadir, said the Food, Beverage and Tobacco sector accounted for more than 35 per cent of total inventory, with unsold goods valued at N755.8bn.
He attributed the high inventory levels to what he described as 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,” Ajayi-Kadir said.
“The high inventory levels for the full year 2025 are occasioned by the squeeze on the Nigerian middle class.”
Economist and consultant, Nonso Iheoma, said the accumulation of unsold goods suggested that manufacturers were increasingly struggling to find consumers able to absorb their output at existing prices.
“The inventory buildup suggests that manufacturers are producing goods that consumers are increasingly unable to absorb at prevailing prices,” he said.
Iheoma warned that the longer finished products remain in warehouses, the greater the financial pressure on manufacturers.
“For businesses, this means more capital can become tied up in finished goods instead of being converted into cash and reinvested in production,” he said.
“It also creates pressure on manufacturers’ working capital. As finished goods remain in warehouses for longer periods, firms may have to rely more heavily on bank credit or other short-term financing to fund operations, while carrying additional storage and inventory costs.”
The situation creates a difficult operating environment for businesses already dealing with high energy, logistics, financing and raw material costs.
Manufacturers that increase prices to recover rising production expenses risk losing more consumers, while those that hold down prices face pressure on their margins.
Inflation changes spending patterns
The demand challenge was intensified by the high inflation recorded in 2025.
Data from the National Bureau of Statistics, based on the rebased Consumer Price Index, put average headline inflation for the year at 23.33 per cent.
The increase in the prices of food and essential commodities left households with less money available for other purchases.
The pressure on household budgets was illustrated by the cost of preparing basic meals. The SBM Jollof Index estimated that preparing a standard pot of jollof rice for a family of five cost about N25,486 in October 2025.
With more household income going towards food and other necessities, manufacturers of consumer goods faced a market in which price sensitivity became increasingly important.
The Centre for the Promotion of Private Enterprise Chief Executive Officer, Dr Muda Yusuf, said Nigeria’s economic transformation depended heavily on its ability to build a strong manufacturing base.
“Industrialisation is not merely an economic aspiration but the foundation of economic sovereignty, sustainable prosperity and national competitiveness in the twenty-first century,” Yusuf said.
“The future of economic prosperity lies not in what Nigeria imports, but in what Nigeria produces. Manufacturing remains the bridge between natural resource wealth and broad-based prosperity. Until that bridge is strengthened, the promise of economic transformation will remain only partially fulfilled.”
Manufacturers seek cheaper power, credit
Against this backdrop, MAN has called for measures aimed at lowering production costs and improving the ability of manufacturers to invest for the long term.
The association wants 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 systems using technologies such as solar and LNG.
It also called for the Nigerian Electricity Regulatory Commission to prioritise Eligible Customer status for industrial clusters, which would enable such clusters to purchase electricity directly from generating companies through dedicated feeders.
Financing is another area where the manufacturers are seeking government intervention.
MAN proposed expanding the Bank of Industry intervention fund to enable manufacturers refinance expensive commercial bank loans at fixed interest rates of between seven and nine per cent, with repayment periods of at least 10 years.
The association also advocated the passage of the Nigeria Industrial Policy as an Act of Parliament.
According to MAN, making industrial targets and incentives legally binding would help protect them from arbitrary policy changes or abandonment by future administrations.
However, the association also recognised that supply-side interventions alone may not resolve the inventory problem.
The purchasing power of consumers needs to recover if manufacturers are to convert their investment and production into sales.
The manufacturing sector’s experience in 2025 therefore reflects a broader tension within the economy. On one side is the drive to expand domestic production and reduce dependence on imports; on the other is a consumer market struggling to keep pace with the cost of goods.
Until household incomes and purchasing power improve, manufacturers may continue to face the unusual situation of investing heavily to expand production while large quantities of finished goods remain unsold.
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