The Manufacturers Association of Nigeria has stated its unsold manufactured goods have reached a record N1.24tn, as its unsold inventories increased by 357.57 per cent in the first half of 2024.
MAN attributed this sharp increase to the declining purchasing power in the country caused by escalating inflation, subsidy removal, and naira devaluation. It disclosed this in its latest report on the country’s economic performance.
MAN’s President, Francis Meshioye, explained, “The inventory of unsold finished products in the manufacturing sector surged by 357.57 per cent year-on-year, reaching N1.24tn in H1 2024.
“This alarming increase is attributed to declining consumer purchasing power due to escalating inflation, subsidy removal, and the devaluation of the naira.
“The high levels of unsold inventories reflect the challenges faced by consumers and the need for interventions to stimulate demand and improve the sector’s performance.”
Meshioye noted that in addition to the increase in unsold goods, employment generation within the manufacturing sector dropped significantly.
According to the report, only 2,606 jobs were created in H1 2024, a 37.83 per cent decline year-on-year.
Meshioye attributed this downturn to “economic uncertainties, inflationary pressures, and an unfavourable business environment.”
Other key findings from the report showed that while the manufacturing sector saw a 30.38 per cent nominal increase in production value to N5.34tn due to rising prices, real manufacturing output declined by 1.66 per cent year-on-year, falling to N1.34tn in H1 2024.
The decline is due to elevated energy costs, forex scarcity, and declining consumer demand, which increased production costs and hindered growth in the sector.
Energy costs remain a major burden on manufacturers as the report revealed a 200 per cent increase in electricity tariffs, significantly raising operational expenses.
Meanwhile, manufacturers spent N238.31bn on alternative energy sources, a 7.69 per cent increase from the previous period, driven by unreliable national grid supply and rising diesel and gas prices.
Capacity utilisation in the manufacturing sector also dropped slightly to 56.4 per cent in H1 2024 from 56.5 per cent in the same period in 2023, highlighting ongoing struggles to optimise production amid economic challenges.
The MAN president remarked that “high energy costs, forex scarcity, and a sluggish economy have resulted in a difficult business environment for manufacturers,” reiterating the importance of “decisive and coherent economic reforms” to stabilise the sector.
He further emphasised that improving the business environment and reducing inflation are critical to reversing the economic downturn.
“The resilience of Nigeria’s policy framework and the effectiveness of its economic management will determine the path forward,” he concluded.
