Market News

By : Tobi Awodipe

Nigeria’s manufacturing sector recorded a sharp decline in foreign capital inflows in quarter one of 2026, despite a strong increase in overall capital importation into the country during the period.

According to recently released data by the National Bureau of Statistics (NBS), the production and manufacturing sector attracted $152.27 million in capital inflows during Q1, accounting for just 1.47 per cent of the total $10.37 billion capital imported into Nigeria.

The figure represents a 50.7 per cent decline from $308.93 million recorded in Q4 2025.

The latest figure represents a significant slowdown in investment directed towards industrial production and manufacturing activities, raising concerns about investor appetite for productive sectors of the economy amid ongoing efforts to drive industrialisation and economic diversification.

Manufacturing remains one of the most important sectors for economic diversification, employment generation, industrial development, export growth and FX earnings.

As a result, sustained weakness in investment inflows could affect the sector’s ability to expand production capacity and improve competitiveness.

The data shows that foreign capital inflows into Nigeria’s manufacturing sector declined significantly every quarter, even though the sector recorded modest growth compared to the corresponding period last year.

On a year-on-year basis, manufacturing inflows increased by 17.2 per cent from $129.92 million in Q1 2025 and attracted a total of $772.45 million in foreign capital throughout 2025.

The figures suggest that while the sector attracted some foreign investment within the period, investor interest remained significantly weaker than the broader growth seen in total capital inflows.

This decline in manufacturing investment came at a time when Nigeria was recording a strong recovery in overall capital importation.

NBS data showed total capital inflows rose to $10.37 billion in Q1 2026, an increase of 83.8 per cent from the $5.64 billion recorded in the corresponding period of 2025.

However, much of the increase was driven by portfolio investments and other short-term capital flows rather than long-term investments in productive sectors.

Portfolio investments remained the dominant source of capital inflows during the quarter. Manufacturing, agriculture and infrastructure attracted only a tiny share of total foreign capital.

Also, Foreign Direct Investment (FDI) stood at $135.08 million, representing just 1.3 per cent of total capital importation within the period.

FDI declined by more than 62 per cent compared to the previous quarter despite a modest year-on-year increase.