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The manufacturing sector in Nigeria faced significant challenges in the fourth quarter of 2024, with production and distribution costs soaring by 18.2%. This was disclosed by the Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, in the Q4 2024 Manufacturers CEO Confidence Index report.

“The findings show that production and distribution costs surged further by 18.2% in the quarter under review, from the 20.1% increase witnessed in the preceding quarter,” the report stated.

While sales volume saw a slight improvement of 1.1%, other key indicators such as capacity utilisation, manufacturing investment, and employment recorded further declines. Capacity utilisation dropped by 0.8%, manufacturing investment fell by 1.2%, and employment decreased by 0.7%.

Ajayi-Kadir noted that the cost of shipment also rose by 11.6% in Q4 2024. “A close observation of the analysis indicates that only the sales volume recorded a favourable change during the period of review,” he said. “However, the analysis generally reveals that the adverse effects of the prevailing macroeconomic reforms are diminishing as production and distribution costs, capacity utilisation, volume of production, investment, employment, and cost of shipment recorded lower adverse changes compared to the previous quarter.

Manufacturers identified high energy costs, forex scarcity, multiple taxation, and poor infrastructure as major threats to their survival. The report highlighted that high electricity tariffs and alternative energy costs remained a significant burden on production.

“Manufacturing operations were directly stalled by the lingering effects of high raw material costs, energy, and logistics, as the existence of high exchange rates, interest rates, and inflation rates remains unfavourable to the overall business environment,” the report noted.

Despite the challenges, the Manufacturing CEO Confidence Index (MCCI) rose slightly to 50.7 points in Q4 from 50.2 points in Q3, indicating marginal optimism among industry players. However, projections for Q1 2025 show a downward trend.

Manufacturers urged the federal government to address the sector’s challenges, including suspending electricity tariff hikes, pausing interest rate hikes, and expanding access to industrial credit. Ajayi-Kadir emphasised that addressing these challenges would stabilise the manufacturing sector, boost production, and drive economic growth.

“Nigerian manufacturing is on its last breath. The future of the country will continue to hang in the balance unless the plight of manufacturers is adequately addressed with appropriate interventions,” he warned.

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