Manufacturers Face N1.77trn Inventory Trap As Costs Outrun Demand

By Kingsley Ani

Nigerian manufacturers are entering a more difficult phase of the recovery, with unsold goods rising even as the cost of producing and selling them accelerates. Listed manufacturing companies on the Nigerian Exchange Limited (NGX) carried combined inventories of about N1.77 trillion in the second quarter of 2026, signalling a widening gap between production capacity and consumer demand.

DEVELOPMENT:

Combined inventories rose 10.6 percent year-on-year from N1.597 trillion, while cost of sales increased 13.7 percent to N1.434 trillion from N1.261 trillion. The build-up cuts across consumer goods, building materials, agriculture and food processing.

Dangote Cement had the largest inventory at N703.58 billion, while UACN recorded a 231.8 percent surge to N189.55 billion. Okomu Oil Palm rose 90.3 percent to N39.90 billion.

Fiona Ahimie, President, Chartered Institute of Stockbrokers (CIS) said that the increase reflects both supply and demand dynamics. “However, demand has not expanded at the same pace. Although inflation has moderated, prices remain elevated relative to household incomes, which have continued to weigh on consumer spending.”

David Adonri, Managing Director, Highcap Securities Limited, blamed inflation and weakening purchasing power, stating: “Consumer pull was adversely affected. Nigeria’s economy is majorly import dependent and rising global inflation emanating from Iran War infiltrated into domestic manufacturing cost.”

Olatunde Amolegbe, Managing Director, Arthur Steven Asset Management Limited, said that production had remained ahead of sales. “However, sales growth has not kept pace with production, resulting in inventory accumulation.”

DATA:

The pressure is uneven. UACN’s cost of sales jumped 226.8 percent to N136.41 billion, while Dangote Cement’s rose 10.2 percent to N448.73 billion. Nigerian Breweries recorded N233.16 billion and Nestlé Nigeria N194.07 billion.

Some companies, however, reduced inventories and costs. Northern Nigeria Flour Mills’ inventory fell 34.6 percent, while NASCON’s declined 17.1 percent. NASCON’s cost of sales also dropped 21.1 percent.

SIGNIFICANCE:

The numbers expose a margin problem. Inventory is rising 10.6 percent while cost of sales is growing faster at 13.7 percent. Unless manufacturers achieve efficiency gains or pass costs to consumers, profitability and cash conversion could come under further pressure.

NEXT MOVE:

The critical variables are consumer purchasing power, interest rates, energy and logistics costs, and inventory liquidation. Amolegbe noted that the MPR remained at 26.5 percent, constraining consumption and inventory financing.

OUR LENS:

This is not simply an inventory problem. It is a demand problem colliding with a high-cost production structure. Ahimie called for reliable power, better transport infrastructure and affordable financing, while Adonri argued that insecurity must be addressed to restore supply and aggregate demand. Amolegbe advocated reliable infrastructure, cheaper financing, local raw-material sourcing and targeted fiscal incentives.

The deeper signal is clear: manufacturers can expand capacity, but without stronger household incomes and lower structural costs, higher production risks becoming higher unsold stock rather than stronger economic growth.

Kingsley Ani is a journalist who has over the years been covering capital, markets, corporate results, economic and public-interest developments with a focus on clear, factual reporting.