The Manufacturers Association of Nigeria (MAN) has revealed that Nigeria’s nominal manufacturing output surged by 34.9% to N33.43 trillion in the second half of 2024, primarily driven by mounting inflationary pressures and rising domestic prices.
This development was disclosed by the Director-General of MAN, Segun Ajayi-Kadir, during the release of the association’s “MAN Economic Review – Second Half 2024” on Monday in Lagos, News Agency of Nigeria (NAN) reports.
“Nominal manufacturing output rose sharply by 34.9 per cent to N33.43 trillion, primarily due to inflationary pressures and rising domestic prices,” he said.
Ajayi-Kadir noted that the report covered key industry performance metrics such as capacity utilisation, production output, inventory levels, local raw materials usage, investments, energy expenditures, and employment trends.
Ajayi-Kadir noted that capacity utilisation of the manufacturing sector improved marginally to 57.0 per cent in 2024, up from 55.1 per cent in 2023.
A half-on-half analysis showed a 1.2 percentage point increase in H2 2024 compared to H1 2024.
He revealed that the sector’s real manufacturing output increased modestly by 1.7 per cent year-on-year to N7.78 trillion.
In terms of real output, Nigeria’s manufacturing sector recorded a modest year-on-year growth of 1.7%, reaching N7.78 trillion in 2024. This improvement was largely driven by increased activities in the motor vehicles and miscellaneous assembly, non-metallic mineral products, and electrical and electronics sectors.
However, when compared on a half-year basis, real output declined by 3.1%, highlighting the persistent challenges faced by the sector, including rising production costs, weak consumer demand, and ongoing price volatility.
Local sourcing and investment trends
According to the report, local sourcing of raw materials in Nigeria’s manufacturing sector showed notable improvement, rising from 52.0% in 2023 to 57.1% in 2024.
This shift was primarily driven by the persistent scarcity of foreign exchange, high costs of imported inputs, and targeted government incentives aimed at promoting the use of domestic resources. Noteworthy progress was observed in sectors such as wood and wood products, textiles and apparel, footwear, and pharmaceuticals. However, the electrical and electronics segment continued to lag behind due to its heavy reliance on imported components.
On the investment front, real manufacturing investment declined sharply by 35.3% year-on-year to N658.81 billion, demonstrating the impact of economic uncertainties and weakened investor confidence.
Despite this overall drop, the second half of 2024 recorded a 19.4% uptick in investments compared to the first half, as some manufacturers cautiously resumed capital expenditures amid tentative signs of stability.
Inventory, employment, and labour trends
The report highlighted a worrying surge in unsold goods:
- Inventory of unsold finished goods rose by 87.5% to N2.14 trillion in 2024, attributed to sluggish consumer demand, inflationary pressures, and high production costs.
- On a positive note, H2 2024 recorded a 27.9% decline in inventory over H1, indicating improved sales clearance and price adjustments.
Employment remained relatively stable:
- 34,769 new jobs were added in 2024, representing a 1.8% increase from 34,163 in 2023.
- However, employee exits also increased to 17,949, up from 17,364 in 2023, signaling labour mobility, economic migration, and internal restructuring across firms.
Power supply and energy expenditure
Electricity supply to industries showed significant improvement:
- Average daily power supply rose to 13.3 hours in 2024, from 10.6 hours in 2023.
- On a half-year comparison, supply increased from 11.4 hours in H1 to 15.2 hours in H2 2024.
Despite this, manufacturers faced steep electricity costs:
- Band A tariffs increased by over 200%, significantly raising operational expenses.
- Manufacturers’ total expenditure on alternative energy (diesel, fuel, and generators) climbed to N1.11 trillion, a 42.3% rise from N781.68 billion in 2023.
- Expenditure jumped from N404.80 billion in H1 to N708.07 billion in H2 2024, marking a 75% increase.
Finance cost and credit challenges
Manufacturers also grappled with a surge in borrowing costs:
- The average lending rate from commercial banks to manufacturers spiked to 35.5% in 2024, up from 28.06% in 2023.
- This pushed total finance costs to N1.3 trillion, limiting capital expansion and investment opportunities for many firms.
Ajayi-Kadir emphasized the need for policy stability, forex liquidity, energy cost reforms, and interest rate moderation to sustain manufacturing growth.
He urged the government to accelerate the implementation of manufacturing-friendly reforms and create a more predictable business environment.