‘The electricity supply situation for industries improved in 2024, with average daily supply increasing to 13.3 hours per day, up from 10.6 hours in 2023. On a half-on-half basis, electricity supply rose from 11.4 hours per day in H1 2024 to 15.2 hours in H2 2024. However, electricity tariffs surged by over 200 percent for Band ‘A’ consumers, significantly increasing manufacturing costs.’
Siaka MOMOH
According to Manufacturing Association of Nigeria (MAN) Second Half Year Report for 2024 released recently, industries enjoyed increase in electricity supply but the wind was taken out of the sail as tariffs surged by over 200%
According to the report, the electricity supply situation for industries improved in 2024, with average daily supply increasing to 13.3 hours per day, up from 10.6 hours in 2023. On a half-on-half basis, electricity supply rose from 11.4 hours per day in H1 2024 to 15.2 hours in H2 2024.
However, electricity tariffs surged by over 200 percent for Band A consumers, significantly increasing manufacturing costs. While power availability improved, many manufacturers still faced frequent outages, and costs as the country witnessed 12 national grid collapses and this remained a major concern.
Says the report: “In response to unreliable grid power and increases in prices of Diesel and PMS, manufacturers’ total expenditure on alternative energy sources surged to N1.11 trillion, a 42.3 percent increase from N781.68 billion in 2023. On a half-on-half basis, manufacturers spent N404.80 billion in H1 2024, which increased by 75.0 percent to N708.07 billion in H2 2024.
“The Food, Beverage & Tobacco sector recorded N229.41 billion in alternative energy spending, up from N182.76 billion in 2023, while Chemical & Pharmaceutical energy costs doubled to N208.68 billion. The Non-Metallic Mineral Products sector’s energy costs increased by 33.7 percent to N118.49 billion, and the Textile, Apparel & Footwear industry saw a fourfold increase, reaching N26.45 billion in 2024, compared to N6.97 billion in 2023.”
The report notes that the Nigerian manufacturing sector faced a challenging but resilient economy in 2024, navigating macroeconomic instability, inflationary pressures, and policy-driven disruptions.
It adds that “The real GDP growth remained subdued, reflecting the economy’s struggle with rising production costs, exchange rate volatility, and declining consumer demand. Inflation surged to 34.8 percent by the end of 2024, significantly eroding purchasing power and increasing operational expenses and that “aggressive monetary tightening by the Central Bank of Nigeria (CBN), which raised the Monetary Policy Rate (MPR) to 27.50 percent, further exacerbated borrowing costs for manufacturers, limiting expansion and new investments.”
It states that “Capacity utilization in Nigeria’s manufacturing sector improved marginally to 57.0 percent in 2024, up from 55.1 percent in 2023. A half-on-half analysis showed a 1.2 percentage point increase in H2 2024 compared to H1 2024. However, persistent challenges such as rising energy costs, forex volatility, and high interest rates constrained further growth. Sectoral analysis revealed that Non-Metallic Mineral Products, Motor Vehicle & Miscellaneous Assembly, and Chemical & Pharmaceuticals sectors recorded the highest improvements.”
For MAN,“The sector’s real manufacturing output increased modestly by 1.7 percent year-on-year to N7.78 trillion, buoyed by increased activity in Motor Vehicle & Miscellaneous Assembly, Non-Metallic Mineral Products, and Electrical & Electronics. However, a half-on-half decline of 3.1 percent in real production reflected rising costs and weak consumer demand. Nominal manufacturing output rose sharply by 34.9 percent to N33.43 trillion, primarily due to inflationary pressures and rising domestic prices.
“The manufacturing sector’s local raw material sourcing increased to 57.1 percent in 2024, up from 52.0 percent in 2023. This shift was largely driven by forex scarcity, high import costs, and government incentives promoting local content. Notable improvements were observed in Wood & Wood Products, Textile, Apparel & Footwear, and Chemical & Pharmaceuticals, while Electrical & Electronics continued to lag due to dependency on imported components.”
And on inventory, it states “The inventory of unsold finished goods surged by 87.5 percent to N2.14 trillion in 2024, driven by weakened consumer demand, escalating production costs, and declining purchasing power. However, a half-on-half decrease of 27.9 percent in H2 2024 suggests improved clearance efforts and price adjustments. The Food, Beverage & Tobacco and Textile, Apparel & Footwear sectors faced the most significant increases in unsold stock.”
MAN states thatreal manufacturing investment fell by 35.3 percent year-on-year to N658.81 billion in 2024, reflecting economic uncertainty and reduced expansion plans. “However, H2 2024 witnessed a 19.4 percent increase compared to H1 2024, as manufacturers cautiously resumed capital expenditures. In nominal terms, total investment declined by 11.3 percent to N2.85 trillion, with Land & Buildings and Furniture & Equipment seeing the most significant declines,” it says.
For employment, MAN notes “The employment situation in Nigeria’s manufacturing sector remained relatively stable in 2024, with 34,769 jobs added, a 1.8 percent increase from 34,163 jobs in 2023. However, the number of employees leaving manufacturing companies also increased from 17,364 in 2023 to 17,949 in 2024, indicating ongoing labour mobility due to economic uncertainties, skill migration, and company restructuring. This resulted in 16,820 net new jobs in 2024, nearly unchanged from 16,799 in 2023.”
And on interest rates, MAN argues “Rising interest rates posed a major financial burden, with commercial bank lending rates to manufacturers surging to 35.5 percent in 2024 from 28.06 percent in 2023.” This, it states is driven by continuous CBN rate hikes, which raised the MPR to 27.50 percent. Consequently, manufacturers’ finance costs totaled N1.3 trillion, constraining investment and expansion plans.”
