Nigeria’s nominal manufacturing output surged by 34.9% to N33.43 trillion in the second half of 2024, driven largely by inflationary pressures and surging domestic prices, according to the latest report from the Manufacturers Association of Nigeria (MAN).
The report, released Monday in Lagos and titled “MAN Economic Review – Second Half 2024”, highlights the complex landscape facing Nigerian manufacturers, combining marginal sectoral growth with deep-rooted structural challenges.
Speaking during the release, MAN Director-General, Segun Ajayi-Kadir, noted that while the sector recorded a modest real output growth of 1.7% year-on-year, reaching N7.78 trillion, the increase was not uniform across the board. “The improvement was primarily driven by increased activities in the motor vehicles and miscellaneous assembly, non-metallic mineral products, and electrical and electronics sectors,” he said.
However, on a half-year basis, real output declined by 3.1%, reflecting the negative effects of high production costs, weak consumer demand, and continuing price volatility.
Raw Material Sourcing and Investment Challenges
The report showed encouraging progress in local raw material sourcing, which rose from 52.0% in 2023 to 57.1% in 2024, propelled by forex scarcity, high import costs, and supportive government incentives. Sectors such as textiles, pharmaceuticals, and footwear showed strong local content usage, although electronics manufacturing continued to rely heavily on imports.
On the flip side, real manufacturing investment fell sharply by 35.3% to N658.81 billion year-on-year, underlining weak investor confidence. Notably, there was a 19.4% rebound in the second half of 2024 compared to H1, signaling cautious optimism among manufacturers.
Manufacturers also reported a sharp 87.5% rise in unsold finished goods, totaling N2.14 trillion in 2024 due to weak demand and inflated production costs. However, there was a 27.9% decline in inventory levels in H2, suggesting improved market clearance and pricing adjustments.
Employment figures showed slight gains, with 34,769 new jobs created in 2024—up 1.8% from 2023. However, employee exits also rose to 17,949, reflecting workforce reshuffling, economic migration, and internal restructuring.
The report showed improvements in electricity supply, with average daily supply increasing to 13.3 hours in 2024 from 10.6 hours in 2023. H2 2024 saw even higher supply at 15.2 hours per day.
Despite this, the cost of power remained a burden. Band A tariffs surged by over 200%, while manufacturers’ spending on alternative energy sources—diesel, generators, and fuel—jumped 42.3% to N1.11 trillion. A half-year comparison revealed a staggering 75% increase in energy costs from N404.80 billion in H1 to N708.07 billion in H2 2024.
Lending Rates and Policy Outlook
Finance costs also soared as lending rates averaged 35.5% in 2024, up from 28.06% in the previous year, driving total borrowing expenses to N1.3 trillion. These costs hampered access to credit and slowed expansion plans for many firms.
Ajayi-Kadir concluded by urging the federal government to fast-track reforms aimed at stabilizing forex supply, moderating interest rates, and reducing energy costs. He stressed the need for policy consistency to ensure long-term sectoral growth and economic resilience.
“Sustaining growth in the manufacturing sector requires deliberate and coordinated policy action. Without addressing the root causes of these challenges, the gains we see today could quickly unravel,” he warned.
