An accumulation of unsold goods across the manufacturing industries rose to N1.4trillion in 2024, the Manufacturers Association of Nigeria (MAN) disclosed 0n Wednesday.
The President of MAN, Francis Meshioye, blamed the development on inflationary burden and declining purchasing power of customers.
He spoke on Wednesday at the 2025 edition of the Media Personality of the year award/presidential luncheon held in Lagos.
Meshioye said Nigeria’s manufacturing sector in 2024 encountered “a myriad of macroeconomic and infrastructural challenges that severely impacted its performance.”
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According to him, the sector faced mounting pressure from high inflation, a depreciating Naira, rising interest rates, escalating electricity tariffs, and record low sales, multiplicity of taxes and levies and militating security concerns.
He said: “These factors collectively strained the sector’s profitability and curtailed its contribution to the nation’s GDP.
“Inflation in Nigeria reached an alarming 34.6% by November 2024, diminishing consumers’ purchasing power and causing a decline in demand for manufactured goods. This inflationary burden also led to an accumulation of unsold inventory, which rose to N1.4 trillion across the manufacturing industries.”
The president also noted that manufacturers were hit hard with “a drastic rise in electricity tariffs, with rates increasing by over 250%,” saying the surge in energy costs “became one of the highest operating expenses for businesses in the sector in 2024.”
He said as a result, many manufacturers sought alternative energy sources, further straining their financial resources and complicating their ability to remain competitive.
Meshioye said the devaluation of the Naira stifled the profitability of manufactured goods as the cost of importing raw materials skyrocketed.
“At the same time, the floating of the exchange rate resulted in a steep depreciation of the Naira, which fell from N666/$ in mid-2023 to over N1700/$ by mid-2024. This depreciation inflated the costs of imported raw materials and machinery, worsening the already strained profitability of manufacturers,” he said.
On the high interest rates, he said, “Interest rates reached unprecedented levels, climbing to 27.7% by November 2024. This increase substantially raised borrowing costs, making it harder for manufacturers to access financing for expansion and modernisation.”
He also expressed worry that manufacturing share of the GDP dropped significantly from 16.04% in Q4 2023 to 12.68% in Q2 2024.
“The combination of high operational costs, reduced consumer demand, and limited access to finance contributed majorly to this decline.
“The rising interest rates, combined with inflation, severely limited the potential for investment in the sector, impeding long-term growth prospects,” he said.
In order to address some of the economic headwinds, the MAN President recommended, “Timely passage of the four tax bills before the National Assembly, implementation of the patronage of made-in-Nigeria products policy and taming of inflation.”
He also asked the government to ensure food security and promote local sourcing of raw-materials and address policy inconsistency.
Meshioye demanded the upgrade of infrastructure (roads and railways), promotion of energy security and downward review of electricity tariffs.
“There is no gainsaying the fact that manufacturing is pivotal to galvanising and sustaining the economic growth and development of Nigeria. We seek the government’s alignment with our conviction that a win for the manufacturing sector is a win for the economy and by extension, a better life for the citizenry,” he said.
Nigeria may be heading towards hyperinflation – Experts
Speaking with Daily Trust on the alarm raised by MAN, an economic expert, Ayokunle Olubunmi, expressed fears that Nigeria may be heading towards hyperinflation and called on the government to rise to the challenge.
Olubunmi, who is the Head of Financial Institutions Ratings at Agusto and Co, said: “I think it is something the government needs to look at. If the inflation is moving at this pace, definitely we are actually moving into a hyperinflationary environment.
“That means in the last two to three years, the prices of things would have actually increased up to three or two hundred times, that’s double or triple.
“We have seen that income is struggling to keep pace with expenses. You notice that more manufacturers will struggle to sell their products. And if care is not taken, it can also affect economic growth.”
Also reacting, a chartered accountant, Dr Gbenga Adeoye, blamed the development on what he called cost – push inflation due to the high foreign exchange rate.
He said prices of the goods produced locally are increased by the manufacturers who import materials with high forex, thereby, impacting the purchasing powers of the consumers.
Adeoye, who is also a lawyer, said there is a need for an urgent foreign exchange control by the government to strengthen naira in order to change the narrative.
According to him, unsold goods have multiplier effect on not only the manufacturing companies, but also on suppliers of raw materials, workers, bank debts among others.
“So, the government has a duty to address the exchange rate in any way it can. And the only way to do that is if there is action on the part of the CBN and the president trying everything possible to stop illicit demand for foreign exchange such that when the supply is higher than the demand, then government can now bring the price down and that will also reduce what is happening in the parallel market.
“More importantly, credits should be given to entities, small scale industries, so that they are able to export more items and then we can have a positive balance of trade.
“When you have a positive balance of trade, the demand for foreign exchange will reduce and then you can bring the exchange rate downward. And when that happens all of this cost – push inflation will be addressed,” Adeoye said.
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