Manufacturing Demand Declines as Consumers Allocate 70% Of Income to Transport and Energy — MAN

The Manufacturers Association of Nigeria (MAN) has reported a steep fall in demand for locally produced goods, driven by a sharp erosion in consumers’ purchasing power caused by rising inflation. This downturn resulted in unsold inventories surging by 87.72 percent to ₦2.14 trillion in 2024, up from ₦1.14 trillion in 2023.

According to MAN’s Director General, Segun Ajayi-Kadir, who disclosed the figures in the association’s latest annual report, most consumers now spend over 70 percent of their income on transportation and energy, leaving little for other goods and services.

He stated, “The manufacturing sector faced an alarming rise in unsold inventory, which climbed to ₦2.14 trillion in 2024 from ₦1.14 trillion in 2023. However, on a half-year basis, the inventory dropped by 27.99 percent — from ₦1.24 trillion in the first half of 2024 to ₦896.22 billion in the second half.”

Ajayi-Kadir attributed the situation to inflationary pressures worsened by fuel subsidy removal, naira depreciation, and high borrowing costs. He also criticised the low patronage of locally manufactured goods, particularly by government agencies, which he said contributed significantly to the growing stock of unsold products.

On investment trends, the MAN DG noted that the manufacturing sector recorded a decline in real investment in 2024, with total investment dropping to ₦658.81 billion — a ₦359.51 billion (35.30 percent) decrease from ₦1.02 trillion in 2023.

However, he added that investment improved slightly in the second half of 2024, rising by ₦58.22 billion or 19.39 percent to ₦358.51 billion, compared to ₦300.29 billion in the first half.

Ajayi-Kadir attributed the decline in overall investment to reduced confidence among manufacturers, escalating inflation, and the high cost of imported machinery. He further revealed that the average exchange rate rose to ₦1,535 per dollar in December 2024, up from ₦907.11 per dollar in December 2023.