The Manufacturers Association of Nigeria, (MAN), has stated its unsold manufactured goods have reached a record N1.24trillion, as its unsold inventories increased by 357.57% in the first half of 2024.
MAN, which disclosed this in its latest report on the countrys economic performance, attributed this sharp increase to the declining purchasing power in the country caused by escalating inflation, subsidy removal, and Naira devaluation.
MANs President, Francis Meshioye, explained, The inventory of unsold finished products in the manufacturing sector surged by 357.57% year-on-year, reaching N1.24trn in H1 2024.
According to him, 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 sectors 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% 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% nominal increase in production value to N5.34trillion due to rising prices, real manufacturing output declined by 1.66% year-on-year, falling to N1.34 trillion in H1 2024. The decline, it stated, 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% increase in electricity tariffs, significantly raising operational expenses.
Meanwhile, the report further said manufacturers spent N238.31 billion on alternative energy sources, a 7.69% 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% in H1 2024 from 56.5% in the same period in 2023, highlighting on-going 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.
