The Manufacturers Association of Nigeria (MAN) has disclosed that Nigeria’s nominal manufacturing output surged by 34.9 percent to N33.43 trillion in the second half of 2024, attributing the growth largely to rising inflation and domestic prices.
The development was announced by MAN’s Director-General, Segun Ajayi-Kadir, during the presentation of the “MAN Economic Review – Second Half 2024” released on Monday in Lagos, according to the News Agency of Nigeria (NAN).
Ajayi-Kadir stated that the sharp rise in nominal output was largely due to the prevailing inflationary pressures and escalating local prices. The report, according to him, detailed performance indicators such as capacity utilization, production levels, inventory build-up, raw material sourcing, capital investment, energy consumption, and employment figures within the sector.
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He noted that capacity utilization within the sector improved slightly, rising to 57.0 percent in 2024 from 55.1 percent in 2023. On a half-year basis, there was a 1.2 percentage point increase in the second half of 2024 compared to the first.
While nominal figures soared, real manufacturing output posted a more modest gain, growing by 1.7 percent year-on-year to N7.78 trillion. This real growth, though limited, was driven by increased production activity in segments such as motor vehicles and miscellaneous assembly, non-metallic mineral products, and electrical and electronics.
However, a half-year comparison revealed that real output declined by 3.1 percent between H2 and H1 2024, exposing the continued struggles manufacturers face, including high production costs, weak consumer purchasing power, and unstable pricing conditions.
On the issue of local raw material sourcing, the report observed a notable improvement. The use of local inputs rose from 52.0 percent in 2023 to 57.1 percent in 2024. This shift was spurred by the enduring scarcity of foreign exchange, high prices of imported inputs, and government initiatives encouraging the adoption of local resources.
Sectors such as wood and wood products, textiles and apparel, footwear, and pharmaceuticals made significant progress in this area, while the electrical and electronics sector lagged due to its heavy dependency on imported components.
Investment trends, however, painted a more concerning picture. Real manufacturing investment dropped sharply by 35.3 percent year-on-year to N658.81 billion, reflecting persistent macroeconomic uncertainties and diminished investor confidence. Yet, on a positive note, there was a 19.4 percent increase in investment in H2 compared to H1 2024, suggesting a cautious resumption of capital expenditure by some firms responding to early signs of macroeconomic stability.
One of the more alarming revelations in the report was the significant build-up of unsold inventory. The total value of unsold finished goods rose by 87.5 percent to N2.14 trillion in 2024, a result of sluggish consumer demand, elevated inflation, and rising production costs. However, compared to the first half of the year, there was a 27.9 percent reduction in inventory volumes in H2, indicating a partial recovery in sales and possible pricing adjustments that helped clear some stock.
On the employment front, the manufacturing sector added 34,769 new jobs in 2024, a modest increase from the 34,163 jobs recorded in 2023. Nonetheless, labor exits also rose to 17,949, up from 17,364 in the previous year. This simultaneous rise in hiring and exits points to increased labor mobility, internal restructuring, and possibly economic migration as firms adjust to a volatile economic landscape.
Electricity supply to manufacturers showed significant gains during the year. Average daily power supply rose to 13.3 hours in 2024, up from 10.6 hours in 2023. On a half-year comparison, this figure jumped from 11.4 hours in the first half to 15.2 hours in the second half. Despite the longer supply hours, manufacturers endured soaring energy costs, exacerbated by the over 200 percent hike in Band A electricity tariffs.
Consequently, total industry expenditure on alternative energy sources—including diesel, petrol, and generator maintenance—ballooned to N1.11 trillion, representing a 42.3 percent increase from N781.68 billion in 2023. This expenditure spiked sharply from N404.80 billion in H1 to N708.07 billion in H2 2024, marking a staggering 75 percent surge in just six months.
Manufacturers were also burdened by the steep rise in the cost of credit. Lending rates from commercial banks jumped to an average of 35.5 percent in 2024, up from 28.06 percent the previous year. As a result, finance costs soared to N1.3 trillion, further constraining firms’ capacity to expand or invest in new production lines.
Ajayi-Kadir concluded by calling on the government to implement urgent reforms aimed at stabilizing the policy environment, improving foreign exchange liquidity, lowering energy costs, and moderating interest rates. He stressed that sustained growth in manufacturing will require a more predictable business climate backed by concrete actions to tackle the underlying economic challenges.