Foreign capital flowing into Nigeria's manufacturing sector dropped sharply in the first quarter of 2026, even as the country recorded one of its strongest performances in overall capital importation in recent years. Latest figures released by the National Bureau of Statistics (NBS) showed that the manufacturing and production sector attracted $152.27 million between January and March 2026, representing just 1.47 per cent of the total $10.37 billion capital imported into the country during the period.
The figure marks a 50.7 per cent decline from the $308.93 million recorded in the fourth quarter of 2025, suggesting a slowdown in investor interest in industrial production and manufacturing activities. On a year-on-year basis, however, the sector performed slightly better. Capital inflows rose by 17.2 per cent compared to the $129.92 million recorded in the first quarter of 2025.
The decline in manufacturing investment came despite a significant increase in Nigeria's overall capital importation. Total foreign capital inflows rose by 83.8 per cent from $5.64 billion in Q1 2025 to $10.37 billion in Q1 2026. A closer look at the data shows that most of the inflows were driven by portfolio investments, which are generally considered short-term and can be easily withdrawn by investors. By contrast, sectors critical to long-term economic growth, including manufacturing, agriculture and infrastructure, received only a small share of the funds.
Portfolio investments dominate
Latest data from the NBS reveals that portfolio investments accounted for an overwhelming 95 per cent ($9.86 billion) of all foreign capital entering the economy during the quarter. Foreign Direct Investment (FDI), often viewed as a more stable source of long-term capital, stood at $135.08 million during the quarter. This accounted for only 1.3 per cent of total capital imported and represented a decline of more than 62 per cent compared to the previous quarter, although it was slightly higher than the level recorded a year earlier.
Despite the weak first-quarter performance, manufacturing remained an important destination for foreign investment in 2025, attracting a cumulative $772.45 million throughout the year. Industry experts have long argued that Nigeria's manufacturing sector faces several obstacles that continue to discourage long-term investment. These include high energy costs, poor infrastructure, logistics bottlenecks, elevated interest rates, foreign exchange instability and difficulties accessing affordable financing.
Challenges for manufacturers
Local manufacturers continue to grapple with elevated energy costs, high interest rates, and foreign exchange volatility, structural bottlenecks that suppress long-term Foreign Direct Investment (FDI). Manufacturers have repeatedly urged the government to implement policies that will encourage productive investment, improve ease of doing business and strengthen local industrial capacity.
The latest NBS data highlights a growing imbalance in Nigeria's investment landscape. While foreign capital inflows are increasing, much of the money is still concentrated in portfolio investments rather than sectors that create jobs, expand industrial output and support economic diversification.
