The *Manufacturers Association of Nigeria’s (MAN)* survey for the first half of 2024 paints a vivid yet sobering picture of the nation’s manufacturing sector. The Director General of MAN, Segun Ajayi-Kadir endorsed statement saying while the global economy showed resilience and recovery, buoyed by improved performances in key economies like the United States, India, and Brazil, Nigeria’s economic landscape struggled under the weight of persistent inflation, volatile exchange rates, and wavering consumer demand.
The survey’s findings reveal the relentless battle faced by manufacturers, who grappled with skyrocketing operational costs amidst a 200% hike in electricity tariffs and record-high interest rates. Despite these obstacles, the sector’s capacity utilization showed a slight recovery compared to the latter half of 2023, hinting at the resilience of Nigerian manufacturers in the face of adversity.
However, the sector’s real output told a starkly different story, falling by 1.66% year-on-year. Manufacturers managed a nominal increase in output, driven more by inflation than actual production gains, underlining the distortionary effect of soaring domestic prices.
A particularly striking figure is the 357.57% surge in unsold finished product inventories, reflecting the erosion of consumers’ purchasing power caused by inflation, subsidy removal, and the naira’s devaluation. The overwhelming inventory backlog symbolizes the tightening noose around manufacturers who are unable to translate production into revenue.
Manufacturers’ efforts to source local raw materials improved slightly, showing a gradual shift toward local inputs amidst forex scarcity. However, the complexities of this shift were evident, as some sectors, such as Non-Metallic Mineral Products and Textiles, saw declines in local sourcing.
Investment in the sector grew by nearly 30% year-on-year, but this rise was primarily nominal, driven by naira depreciation rather than genuine expansion. As manufacturers fought to stay afloat, job creation plummeted, with the sector generating only 2,606 jobs in H1 2024—a sharp decline from the previous year.
Electricity supply improved slightly, but the gains were overshadowed by soaring tariffs and continued reliance on expensive alternative energy sources. The sector spent an estimated ₦238.31 billion on self-generated power, a figure that encapsulates the systemic issues plaguing Nigeria’s energy infrastructure.
As manufacturers reflect on the challenges of H1 2024, the consensus is clear: Nigeria’s economic framework must undergo significant reforms. Policymakers must prioritize policy consistency, enhance the business climate, and champion economic diversification to stabilize the sector and restore investor confidence.
The story of Nigeria’s manufacturing sector in 2024 is one of resilience amidst adversity. Yet, it serves as a clarion call for transformative action—action that could determine whether the nation remains mired in economic turbulence or ascends to sustainable growth.
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