Weak demand leaves manufacturers with ₦1.8 trillion worth of unsold goods
Manufacturers face mounting stockpiles as weak demand, rising costs and imported inflation strain Nigeria’s industrial sector.
Nigeria’s manufacturing sector is under pressure as weak consumer demand and rising production costs push finished goods and raw material inventories to record levels. Despite claims from the Federal Government that macroeconomic indicators are improving, the latest data reveal that manufacturers are struggling to move products, raising concerns about the sector’s health.
Financial Vanguard reports that the combined inventory of major Nigerian manufacturing firms rose from ₦1.6 trillion in the first nine months of 2024 to about ₦1.8 trillion in the same period of 2025. At the same time, raw material stockpiles climbed nearly 15.4 percent to almost ₦1.5 trillion. Analysts say this reflects not only unsold products but also deliberate stockpiling of inputs as companies hedge against inflation, currency fluctuations, and tight credit conditions.
Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, explained the trend: “Over the last three years, inflationary pressures have significantly eroded household incomes in real terms. As purchasing power weakens, consumers become less able to buy manufactured products, especially those that are not considered essential.”
He added that rising production costs, including energy, logistics, and foreign exchange pressures, force manufacturers to increase product prices. “Once these higher costs are reflected in final product prices, demand becomes even more constrained because consumers already grappling with weaker purchasing power cannot absorb the price increases,” Yusuf said.
Inventory challenges across leading firms
Some of Nigeria’s biggest manufacturing companies have seen dramatic increases in stock. Dangote Cement Plc posted inventories of ₦769.5 billion, up from ₦669.7 billion the previous year. Nigerian Breweries Plc recorded ₦224 billion compared with ₦181.3 billion, while Nestlé Nigeria Plc reported ₦203.4 billion from ₦174.8 billion. BUA Foods Plc saw stockpiles rise to ₦76.7 billion from ₦59.8 billion, and Cadbury Nigeria’s inventories jumped to ₦26.7 billion from ₦13.8 billion.
The raw material side also reflected the pressures of imported inflation and currency risk. Nigerian Breweries led with ₦486.9 billion in raw materials, up from ₦407.2 billion, followed by Dangote Sugar at ₦450.7 billion from ₦401.6 billion. Nestlé Nigeria increased to ₦84 billion, and Cadbury Nigeria doubled to ₦10 billion from ₦5 billion.
Also Read: Nigeria’s 10 largest companies by market capitalisation in 2025
While some firms managed slight declines, such as Dangote Sugar Plc, Unilever Nigeria Plc, and NASCON Allied Industries, the broader trend indicates a sector grappling with both input and output pressures.
Oluropo Dada, President of the Chartered Institute of Stockbrokers, weighed in on the implications: “The cost of labour and imported materials has increased significantly. This drives up production costs, squeezes margins, and pressures working capital. Ultimately, it leads to higher prices for consumers and strains manufacturers’ financial positions.”
David Adonri, Executive Vice Chairman of Highcap Securities, noted that inflation continues to play a major role. “Any import-dependent enterprise that does not earn in hard currency will continue to be exposed to currency risk. Backward integration could mitigate this, but security and infrastructure challenges make it difficult,” he said.
Financial analysts also point to the structural effects of weak demand. Ambrose Omordion of InvestData Consulting stated, “High interest rates compound the problem, as unsold goods funded through bank loans attract interest expenses. This squeezes margins and turns inventory from a buffer into a financial liability.”
Dr Yusuf explained that stagnant incomes and rising prices have altered household consumption patterns, forcing consumers to prioritise essential goods. “Under such circumstances, demand for non-essential manufactured products tends to fall sharply. When finished goods fail to sell, inventories naturally accumulate. The situation is even more difficult for products with expiry dates, where high inventory translates into heavier financial losses and operational risk,” he said.
The impact extends to Nigeria’s industrialisation ambitions. Dr Yusuf warned that sluggish industrial growth, low capacity utilisation, potential job losses, declining investor confidence, reduced profitability, and weaker incentives to invest all stem from the current inventory build-up and constrained demand.
Experts agree that the sector must pursue practical solutions. Recommendations include expanding local sourcing, strengthening supplier partnerships, improving inventory management and demand forecasting, and innovating product design to align with consumer needs. “Without such measures, manufacturers risk prolonged inefficiency, higher production costs, and continued financial strain,” Yusuf added.
