Manufacturers upbeat about economy as capital investment up 26%

Manufacturers are spending more on the acquisition of technologies, equipment, capital work in progress, and facilities, signaling they are upbeat that economic activities would pick up.

With data from Unilever Nigeria Plc, Cadbury Nigeria Plc, BUA Foods, Nigerian Breweries and McNichols Consolidated Plc 2024 audited financial statement, cumulative expenditure totaled N179.3 billion, up 26.4 percent in 2024 and is on track to be the highest since 2020.

The rise in capital investment comes amid a broader recovery in the Nigerian economy, following a period of sluggish growth driven by inflationary pressures, foreign exchange volatility, and supply chain disruptions.

Industry analysts suggest that the increase in Capex is a strategic move by manufacturers to boost productivity, enhance operational efficiency, and expand production capacity.

According to data from the Manufacturers Association of Nigeria (MAN), the aggregate Manufacturers CEOs Confidence Index (MCCI) increased by 0.5 points to 50.7 points in the fourth quarter from 50.2 points in the preceding quarter of 2024 as consumer demand surged during the festive period.

On a year-on-year basis, the aggregate MCCI decreased by 1.1 points from 51.8 percent in the corresponding period of 2023.

Reading above 50 points indicates the expectation for economic expansion, while an index score of less than 50 suggests deterioration in the operating environment.

According to MAN’s Q4 report, current business condition, employment and production level indices recorded improvement due to the moderate increase in consumer demand, especially during the festive period.

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“Manufacturing operations were directly stalled by the lingering effects of the high cost of raw materials, energy, and logistics as the existence of high exchange rate, interest rate and inflation rate remained unfavourable to the overall business environment,” the report said.

Similarly, the Purchasing Managers’ Index (PMI) for January 2025 stood at 50.2 points, signaling an expansion in economic activities for the second consecutive month, according to the latest report released by the Central Bank of Nigeria (CBN).
The data reflected a positive trend in key sectors, including industry and agriculture, while the services sector experienced a contraction.
However, despite the positive trajectory, industry stakeholders caution that persistent challenges such as high energy costs, multiple taxation, and infrastructural deficits still pose risks to sustained growth in the manufacturing sector.

The Monetary Policy Committee (MPC) maintained the benchmark interest rate, known as the Monetary Policy Rate (MPR), at 27.5 percent following the rebasing of the Consumer Price Index (CPI), signaling the return of a real rate environment.

Africa’s fourth largest economy CPI rebased rate fell to 24.48 percent in January up from 34.8 percent last December.

CardinalStone analysts in a note said that the rebasing will drive improved capturing of economic activities and support planning initiatives. However, it is likely to shrink the size of the informal economy.

It further explained that the rebasing is also likely to result in a significant increase in the reported size of the economy.

Nigerian Breweries
As of December 31, 2024, Nigerian Breweries Plc reported total Property, Plant, and Equipment (PPE) valued at N535.2 billion, marking an increase from N441.4 billion in 2023.

The financial statement disclosed that its additions at the beginning of the year included capital work-in-progress worth N65.8 billion, returning packaging materials worth N39.4 billion, machinery worth N12.5 billion, furniture and equipment worth N10.5 billion, motor vehicles worth N6.9 billion and N2.19 billion.

This, however, brings the total amount of acquired capital expenditure worth N137.5 billion compared to N98.7 billion reported in 2023.

In a statement, the company disclosed it has acquired an 80 percent majority stake in Distell Wines and Spirits Nigeria Limited (Distell Nigeria) following approval from the South Africa Reserve Bank.

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This acquisition grants Nigerian Breweries access to local production and importation of wines, spirits, and flavored alcoholic beverages from South Africa, including Amarula Cream Liquor, Nederburg, Drostdy-Hof, 4th Street, Bain’s Whiskey, Knight Whiskey, Scottish Leader Whiskey, Chamdor, Hunters, and Savanna.

BUA Foods
BUA Foods Plc recorded an outflow of N30.8 billion for the acquisition of property, plant, and equipment in 2024.

The PPE investments were distributed across various asset categories, Plant & Machinery worth N1.73 billion, Capital Work in Progress (CWIP) worth N28 billion, Land & Buildings worth N226 million, and Bearer plant worth N361 million among others.

These investments contributed to an increase in total PPE to N379.23 billion for the group, compared to N357.99 billion in 2023. The acquisitions primarily supported operational capacity expansion, efficiency improvements, and logistics enhancements.

In a statement, the company disclosed that it signed an agreement with IMAS, a prominent Turkish flour milling equipment manufacturer, to build four (4) state-of-the-art wheat and flour milling factories with a cumulative milling capacity of 3200 tonnes per day.

In September, BUA Foods announced a planned significant expansion of its pasta production facility after signing an agreement with FAVA (Italy), one of the world’s leading pasta equipment manufacturing companies.

Abdul Samad Rabiu, BUA Foods’ Chairman said “Our manufacturing capacity expansion will continue to enable us to extend the boundaries of what we can produce and deliver, supporting our nation’s development by providing solutions to ongoing food shortages.

Unilever Nigeria Plc
As of December 31, 2024, Unilever Nigeria Plc reported total Property, Plant, and Equipment (PPE) valued at N22.09 billion, marking an increase from N18.7 billion in 2023.

The financial statement disclosed that its additions during the year included capital work-in-progress worth N5.79 billion, and machinery worth N76 million.

This, however, brings the total amount of acquired capital expenditure worth N5.86 billion compared to N2.24 billion reported in 2023.

Cadbury Nigeria Plc
Cadbury Nigeria Plc reported total Property, Plant, and Equipment (PPE) valued at N16.7 billion, marking an increase from N14.5 billion.

During the year, the company invested more in its capital work-in-progress amounting to N5.06 billion. This brings the total amount of acquired capital expenditure worth N5.06 billion last year compared to N3.7 billion reported in 2023.

McNichols Consolidated
McNichols recorded an outflow of N141 million for the acquisition of property, plant, and equipment in 2024.

The PPE investments were distributed across various asset categories, Plant & Machinery worth N138.2 billion and office equipment worth N2.25 billion.

These investments contributed to an increase in total PPE to N390 million for the group, compared to N320 million in 2023. The acquisitions primarily supported operational capacity expansion, efficiency improvements, and logistics enhancements.