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The Manufacturers Association of Nigeria (MAN) has released its ‘MAN Economic Review for Second Half of 2024,’ revealing a marginal improvement in the country’s manufacturing sector. According to the report, capacity utilization in the sector increased to 57.0% in 2024, up from 55.1% in 2023. This represents a 1.2 percentage point increase in the second half of 2024 compared to the first half.

Capacity utilisation improved marginally to 57.0% in 2024, driven by sectors such as non-metallic mineral products, motor vehicle & miscellaneous assembly, and chemicals & pharmaceuticals. Local raw material sourcing increased to 57.1% in 2024, up from 52.0% in 2023, largely due to forex scarcity, high import costs, and government incentives promoting local content.

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Real manufacturing output rose modestly by 1.7% year-on-year to N7.78 trillion, buoyed by increased activity in motor vehicle & miscellaneous assembly, non-metallic mineral products, and electrical & electronics. However, a half-on-half decline of 3.1% in real production reflected rising costs and weak consumer demand. Nominal manufacturing output rose sharply by 34.9% to N33.43 trillion, primarily due to inflationary pressures and rising domestic prices

MAN Director-General Segun Ajayi-Kadir noted that persistent challenges such as rising energy costs, forex volatility, and high interest rates constrained further growth. “While power availability improved, many manufacturers still faced frequent outages and costs as the country witnessed 12 national grid collapses, and this remained a major concern,” he said.

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The report highlighted an improvement in electricity supply, with average daily supply increasing to 13.3 hours per day in 2024, up from 10.6 hours in 2023. However, Ajayi-Kadir noted that electricity tariffs surged by over 200% for Band A consumers, significantly increasing manufacturing costs. Manufacturers’ total expenditure on alternative energy sources surged to N1.11 trillion, a 42.3% increase from N781.68 billion in 2023. A further breakdown showed that on a half-on-half basis, manufacturers spent N404.80 billion in H1 2024, which increased by 75.0% to N708.07 billion in H2 2024.

The sector’s inventory of unsold finished goods surged by 87.5% to N2.14 trillion in 2024, driven by weakened consumer demand, escalating production costs, and declining purchasing power. However, a half-on-half decrease of 27.9% in H2 2024 suggests improved clearance efforts and price adjustments. “The Food, Beverage & Tobacco and Textile, Apparel & Footwear sectors faced the most significant increases in unsold stock,” Ajayi-Kadir said.

Real manufacturing investment fell by 35.3% year-on-year to N658.81 billion in 2024, reflecting economic uncertainty and reduced expansion plans. However, H2 2024 witnessed a 19.4% increase compared to H1 2024, as manufacturers cautiously resumed capital expenditures. In nominal terms, total investment declined by 11.3% to N2.85 trillion, with land & buildings and furniture & equipment seeing the most significant declines.

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Rising interest rates also posed a major financial burden, with commercial bank lending rates to manufacturers surging to 35.5% in 2024, from 28.06% in 2023. This, according to MAN, was driven by continuous Central Bank of Nigeria (CBN) rate hikes, which raised the Monetary Policy Rate (MPR) to 27.50%. “Consequently, manufacturers’ finance costs totaled N1.3 trillion, constraining investment and expansion plans,” Ajayi-Kadir said.

Ajayi-Kadir stated that the manufacturing sector faced a challenging but resilient economy in 2024, navigating macroeconomic instability, inflationary pressures, and policy-driven disruptions. “Inflation surged to 34.8% by the end of 2024, significantly eroding purchasing power and increasing operational expenses,” he said. The MAN DG emphasized that aggressive monetary tightening by the CBN further exacerbated borrowing costs for manufacturers, limiting expansion and new investments.

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