Official promises of economic recovery are contradicted by an increase in inventory.
Written by Peter Egwuatu
The most recent financial results of Nigeria’s industrial sector have shown that considerable pressures still exist, despite indications of strengthening macroeconomic data released by the Federal Government.
According to Financial Vanguard’s findings, manufacturers have been struggling with growing raw material stockpiles and inventories (unsold goods) that are clogging warehouses. These issues have revealed significant inflationary constraints, foreign exchange, and credit pressures that continue to negatively impact industry performance.
Leading manufacturing companies reported a total inventory rise of N200 billion in the first nine months of 2025 (9M’25), rising to around N1.8 trillion from N1.6 trillion in the same time in 2024 (9M’24), or an increase of roughly 18.8%. Raw material inventories increased by almost 15.4% to almost N1.5 trillion throughout that time.
The pattern of the increase, according to financial and industry experts, indicates that inventory accumulation in 2025 was fueled by intentional input stockpiling as businesses battled to protect themselves from inflation, exchange-rate volatility, and tight monetary conditions, in addition to unsold finished goods.
Given the ongoing increase in production costs and replacement prices, industry experts contended that the trend runs counter to government assertions that inflation drastically decreased in 2025.
Position of inventory
The scope of the problem is demonstrated by a comparison of inventory locations across 17 significant manufacturing firms.
With N769.5 billion in inventories, Dangote Cement Plc reported the largest amount, up from N669.7 billion in 9M’24.
Nestlé Nigeria Plc reported stockpiles of N203.4 billion in 9M’25 compared to N174.8 billion in 9M’24, while Nigerian Breweries Plc saw inventories increase to N224 billion in 9M’25 from N181.3 billion in 9M’24.
BUA Foods Plc posted N76.7 billion from N59.8 billion, while Lafarge Africa Plc reported N117 billion from N104.2 billion. Against 13.8 billion, Cadbury Nigeria Plc reported N26.7 billion.
Guinness Nigeria Plc had an increase to N63.7 billion from N41.9 billion, and International Breweries Plc saw a rise to N107 billion from N89.7 billion.
Other companies that had notable increases in inventory were Champion Breweries Plc, which reported N3.7 billion from N2.9 billion, and Northern Nigeria Flour Mills, which reported N20.8 billion against N16.5 billion.
Against N20.5 billion, Vitafoam Nigeria Plc reported N28.7 billion.
Nonetheless, several manufacturers reported better inventory positions, according to Financial Vanguard.
In 2025, Dangote Sugar Plc’s inventory was N130.5 billion, down from N131.5 billion in 9M’24, while UAC of Nigeria Plc’s was N37.5 billion, down from N54.9 billion.
Similarly, in 2024, NASCON Allied Industries Plc reported a drop to N14.3 billion from N17.6 billion.
Additionally, Berger Paints reported N2.5 billion instead of N3.3 billion, while Unilever Nigeria Plc reported N28.3 billion instead of N30.8 billion the year before.
Inventories of raw commodities increase pressures.
A significant increase in raw material inventories coincided with the inventory build-up, reflecting manufacturers’ attempts to protect themselves from inflation, foreign exchange difficulties, and import inflation.
Nigerian Breweries Plc led the pack with raw material inventories of N486.9 billion, up from N407.2 billion the year before. Dangote Sugar Plc, which reported a growth of N450.7 billion from N401.6 billion, came in close second.
While Cadbury Nigeria reported N10 billion from N5 billion, Nestlé Nigeria reported a raw materials build of N84 billion in 9M’25 compared to N73.5 billion in 9M’24.
Compared to N38.6 billion in 2024, BUA Foods reported a raw material stockpile of N52.5 billion.
Northern Nigeria Flour Mills reported N17.7 billion versus N14.7 billion, while Guinness Nigeria’s raw materials stock increased from N8.7 billion to N39.6 billion.
Vitafoam Nigeria reported N21.9 billion versus N16.3 billion, and Champion Breweries reported N6.9 billion against N4.9 billion.
Other manufacturers, however, reported a drop in their raw material inventory.
Dangote Cement, which dropped from N299.8 billion in 9M’24 to N255.2 billion, is at the top of the pack.
While NASCON Allied Industries reported N6.6 billion against N11.2 billion, Unilever Nigeria reported N14.4 billion against N19.8 billion.
Berger Paints reported a slight drop to N4.6 billion from N4.7 billion in 2024, while Lafarge Africa Plc saw a drop to N9.7 billion from N10.0 billion.
Professionals talk
According to industry experts, the increase in raw material stocks is a reflection of the period’s exchange-rate pressures. Since many firms rely primarily on imported supplies, replacement costs increased dramatically as a result of the weak naira.
Even when production volumes and sales decreased, companies grew their raw material reserves to protect themselves from FX volatility and possible supply interruptions.
In order to protect themselves from FX volatility, manufacturers were compelled to retain extra raw materials. However, there was a price for this, particularly in a market where demand was already low, according to a financial expert.
Why there is a rise in unsold inventories
The difficulties of unsold inventory and growing raw material stocks, according to Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), show a challenging operating environment that is fueled by structural limitations and macroeconomic headwinds.
He claimed that low purchasing power is a major contributing issue. Real household incomes have been severely reduced during the past three years due to inflationary pressures. Customers are less able to purchase manufactured goods, particularly those that are not deemed necessary, as their spending power declines, he said.
“For many manufacturing firms, the cost of production has increased considerably driven by factors such as energy costs, foreign exchange pressures, logistics costs, and other input-related challenges,” Yusuf added, pointing to rising production costs. Naturally, in order to stay in business, companies have had to raise the prices of their products,” he remarked.
But he claimed that increased costs further limited demand. He went on to say, “Demand becomes even more constrained once these higher costs are reflected in final product prices because consumers already struggling with weaker purchasing power cannot absorb the price increases.”
Yusuf added that the issue has been made worse by shifting consumer habits. Households are compelled to prioritize spending since earnings are essentially stagnant and costs are rising rapidly. Demand for produced goods that are not necessities tends to decline precipitously in such situations,” he stated.
Yusuf clarified that stocks naturally build up when completed things don’t sell. “For manufacturers who produce goods with expiration dates, the situation is even more dire, as high inventories result in greater operational risk and heavier financial losses,” he said.
“Raw material stocks will remain high when finished goods remain unsold,” the CEO of CPPE continued. Because production cycles slow down in reaction to lower sales, inputs are not being depleted at the anticipated rate. Consequently, increasing finished-goods inventory frequently has a direct impact on increased raw material inventory.
Efforts to industrialize are under pressure.
Regarding the wider ramifications, Yusuf cautioned that the pattern erodes Nigeria’s push for industrialization. The wider conclusion is that Nigeria is making less of an attempt to industrialize. Industrial development is still slow: in the last quarter of 2025, the industrial sector’s GDP grew by roughly 1.25 percent, while the entire GDP grew by about 4.3%,” he continued.
Low capacity utilization, possible job losses, waning investor confidence, less incentives to invest in manufacturing, decreased profitability, and a weakened ability to provide dividends and shareholder value are all linked to this, he said.
According to Yusuf, there is a compelling argument for growing resource-based industrialization in the future in order to lower costs through better local input sourcing and lessen exposure to FX volatility. Through cost restructuring, product reinvention, focused market segmentation, and innovation, he continued, businesses must maintain their flexibility.
Increasing expenses and weak demand-squeezing companies
The 13th President of the Chartered Institute of Stockbrokers (CIS), Oluropo Dada, responded by stating that the rise in inventory is a result of sluggish consumer demand, increased manufacturing costs, and a persistent reliance on imported commodities.
“Local raw material and other input prices tend to skyrocket due to the significant increase in labor costs,” he said. “The majority of developed economies experienced higher rates of inflation, which explained increases in imported raw materials through imported inflation, even though Nigeria experienced relative foreign exchange stability in 2025,” he stated.
Increased working capital pressure, margin compression, greater financing costs, the possibility of capacity underutilization, and job losses are some of the economic ramifications, according to Dada. Higher pricing, fewer product options, and quality changes like smaller package sizes are the results for customers, he claimed.
In order to lower FX exposure and stabilize prices, he suggested that firms explore backward integration by creating local supply chains, investing in supplier alliances, and enhancing demand forecasting and inventory management.
Contradiction in inflation
According to David Adonri, Executive Vice Chairman of Highcap Securities Limited, inflation or higher volumes might cause inventory values to grow. The disproportionate increase in manufacturing costs suggests that inflationary expansion was a major factor. This situation runs counter to the official assertion that the pace of inflation significantly decreased in 2025,” he stated.
He went on to say that both consumers and manufacturers were impacted by inflation. Currency risk will persist for any import-dependent business that does not generate revenue in hard currency. This emphasizes the value of backward integration, even though it is difficult in rural areas due to insecurity,” he said.
Pressures from financing and demand
The increase in inventory, according to Ambrose Omordion, Chief Operating Officer and Financial Analyst of InvestData Consulting Limited, indicates a slower flow of completed items.
“As consumers prioritized spending on necessities like food, transportation, and energy, high inflation in the first nine months of 2025 eroded household purchasing power,” he said. He observed that “consumers responded by buying less, but manufacturers raised prices to survive.”
High interest rates, he continued, made matters worse since unsold items financed by bank loans accrued interest costs, which reduced margins and transformed inventories from a safety net into a burden.
Examining backward integration
The dramatic increase in raw material stocks, according to Omordion, calls into doubt the efficacy of Nigeria’s backward-integration policy, independent of demand and funding constraints. Across important value chains like food processing, cement, sugar, textiles, and pharmaceuticals, the program seeks to lessen reliance on imported inputs.
But the continued existence of large raw material stocks points to uneven development, exposing producers to poor consumer demand, inflation, and exchange rate fluctuations, he said.
