Manufacturing output hits N33.43trn in H2 2024 as inflation drives up prices
BY MOTOLANI OSENI
Nigeria’s manufacturing sector recorded a significant nominal output of N33.43 trillion in the second half of 2024, reflecting a 34.9 per cent surge driven largely by escalating inflation and rising domestic prices, the Manufacturers Association of Nigeria (MAN) has revealed.
Director-General of MAN, Segun Ajayi-Kadir, disclosed this during the release of the association’s “MAN Economic Review – Second Half 2024” in Lagos, where he highlighted that the industry’s performance was shaped by persistent inflationary pressures and tough operating conditions.
While the sector’s real output posted a modest year-on-year growth of 1.7 per cent to N7.78 trillion, Ajayi-Kadir noted this reflected some resilience amid rising production costs, weak consumer demand, and price volatility. However, on a half-year basis, real output slipped by 3.1 per cent, underscoring the depth of the sector’s challenges.
Ajayi-Kadir reported a slight recovery in capacity utilisation, which edged up to 57.0 per cent in 2024 from 55.1 per cent a year earlier. The second half also recorded a 1.2 percentage point improvement compared to the first half, suggesting manufacturers are making slow but steady adjustments despite the headwinds.
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The report pointed to improved local sourcing of raw materials, which climbed to 57.1 per cent from 52.0 per cent, as manufacturers turned to local alternatives in response to foreign exchange scarcity and high import costs. Nonetheless, some subsectors, particularly electrical and electronics, continued to rely heavily on imported components.
Despite these gains, investment in the sector declined sharply by 35.3 per cent year-on-year to N658.81 billion, reflecting the effect of economic uncertainty and subdued investor confidence. Still, there was a 19.4 per cent uptick in investments between the first and second halves of the year, as manufacturers cautiously resumed capital spending.
The sector also saw inventory of unsold goods soar by 87.5 per cent to N2.14 trillion over the year, exposing the strain of tepid consumer demand and high operating costs. However, a 27.9 per cent drop in unsold stock in the second half suggested gradual sales recovery driven by price adjustments and promotional strategies.
Employment in the sector recorded slight growth, with 34,769 new jobs created in 2024, a 1.8 per cent increase from 34,163 in 2023, though this was offset by higher labour turnover as employee exits rose to 17,949 from 17,364 in the previous year.
On power supply, manufacturers enjoyed improved electricity availability, with daily supply rising to 13.3 hours in 2024 from 10.6 hours the previous year. However, this was overshadowed by soaring energy costs, as Band A tariffs climbed over 200 per cent and manufacturers’ spending on alternative energy sources such as diesel and generators ballooned by 42.3 per cent to N1.11 trillion.
Rising borrowing costs also weighed heavily on the sector, with average lending rates spiking to 35.5 per cent from 28.06 per cent, driving total finance costs to N1.3 trillion and further restricting capital expansion.
Ajayi-Kadir urged the government to prioritise policy stability, enhance foreign exchange liquidity, reduce energy costs, and moderate interest rates, stressing that these steps were essential to revitalise the sector and stimulate sustainable growth.
