Nigeria’s manufacturing sector records a 30.38% increase in output year-on-year, reaching N5.34 trillion in the first half of 2024, according to the latest economic review by the Manufacturers Association of Nigeria (MAN). The report, released on Monday, highlights the challenges faced by the sector, driven by inflation, subsidy removal, and the devaluation of the naira.
Despite the growth in nominal output, manufacturers continue to struggle with inflationary pressures, which impact real production levels. The association attributes this surge in nominal growth to rising domestic prices, as the Consumer Price Index (CPI) climbs to 34.19% as of June 2024.
A key concern raised by MAN is the dramatic increase in unsold finished goods, with inventory levels soaring by 357.57% year-on-year. By the end of H1 2024, unsold products are valued at N1.24 trillion, a significant jump from N271 billion in the corresponding period of the previous year. This increase is largely due to reduced consumer purchasing power amidst economic uncertainties.
Additionally, manufacturers are grappling with higher operational costs, particularly in energy. The report reveals that spending on alternative power sources reached N238.31 billion in H1 2024, reflecting a 7.69% increase from the latter half of 2023. This surge is attributed to rising prices of diesel, gas, and other energy inputs, as well as the need for self-sufficient power generation due to unreliable supply from the national grid. The manufacturing sector is further burdened by a substantial rise in electricity tariffs imposed by Distribution Companies (DisCos), increasing costs for manufacturers.
Employment figures within the sector also show a downturn, with only 2,606 new jobs created in H1 2024—a 29.99% decline compared to H2 2023. On an annual basis, job creation falls by 37.83%, reflecting the broader economic challenges. Notably, the Chemical and Pharmaceuticals industry leads in job creation, while the Motor Vehicle & Miscellaneous Assembly sector lags behind.
The report emphasizes the urgent need for comprehensive economic reforms to stabilize the business environment. Key recommendations include enhancing policy consistency, fostering economic diversification, and implementing measures to stimulate consumer demand. Addressing these challenges is essential to reversing the current economic downturn, boosting job creation, and improving overall welfare for Nigerian citizens.
