Amidst an unfavorable business climate in Nigeria, foreign investments in the manufacturing sector saw a sharp decline of 51% in 2022, totaling $978.31 million, compared to $2 billion in 2021. The manufacturing sector’s share of total capital importation fell from 30% in 2021 to 18.4% in 2022, signaling a notable drop in investor confidence.
According to data from the National Bureau of Statistics (NBS), the manufacturing sector ranked second in attracting foreign investments in 2022, following the banking sector with $2.09 billion inflow. In contrast, the manufacturing sector held the top spot in 2021, drawing over $2 billion in foreign investments.
Challenges faced by the manufacturing sector include high operating costs, erratic power supply, inconsistent government policies, multiple taxation, and infrastructural deficiencies. These factors have contributed to the unattractive investment climate in the country, leading to reduced foreign investments in the sector.
Stakeholders in the industry, including the Manufacturers Association of Nigeria (MAN), are calling for the creation of a conducive business atmosphere by addressing power supply challenges, reviewing forex policies, and reducing tax burdens. They also emphasize the need for public-private partnerships to enhance manufacturing capabilities and infrastructure.
Opinion: The decline in foreign investments in Nigeria’s manufacturing sector highlights the urgent need for comprehensive reforms to attract investors and revitalize the industry. Addressing key challenges, such as infrastructural deficiencies and inconsistent policies, is essential to restore investor confidence. By implementing investor-friendly measures and fostering public-private collaborations, Nigeria can pave the way for sustainable growth in its manufacturing sector and bolster the overall economy.