Manufacturers moan demand down on their goods amid inflation headwinds
By Jeph Ajobaju, Chief Copy Editor
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“Over 70 percent of consumer income is now allocated to transportation and energy expenses, negatively impacting demand for manufactured products and leading to a piling up of unsold inventories.
“Additionally, the lack of patronage of locally produced goods, especially by government agencies, has contributed to high inventory levels.”
The sector witnessed a reduction in real investment in assets in 2024.
Investment stood at N658.81 billion in 2024, a N359.51 billion (35.30 per cent) reduction against N1,018.32 in 2023, but the half yearly (H1 2024) report shows real investment rose by N58.22 billion (19.39 per cent) to N358.51 billion in H1 2024 from N300.29 billion in H1 2023.
“This reduction in investment is attributed to a reduction in the confidence of manufacturers in the economy, high cost of plants and machinery due to inflationary pressures and the devaluation of the Naira.
“The average exchange rate increased to N1,535/$1 in December 2024 from N907.11/$ recorded in December 2023” – MAN Director General Ajayi-Kadir.
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Manufacturers have reiterated lowering demand for their products caused by the decreasing purchasing power of consumers amid inflation headwinds.
Declining consumer purchasing power led to 87.72 per cent rise in unsold inventory to N2.14 trillion in 2024 from N1.14 trillion in 2023, according to Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria (MAN).
Ajayi-Kadir disclosed in the latest MAN annual report that consumers now allocate more than 70 per cent of their income to transportation and energy costs, and also cited a lack of patronage of locally produced goods, especially by government agencies, as contributing to the high inventory levels.
“The manufacturing sector grappled with a staggering surge in unsold inventory, skyrocketing to N2.14 trillion in 2024 from N1.14 trillion recorded in 2023 indicating 87.72 per cent increase over the period,” he said.
“However, on half-on-half, the inventory reduced from N1,244.56 billion recorded in the first half to N896.22 billion recorded in the second half, indicating 27.99 percent reduction within the period
“This alarming trend arose from deteriorating consumer purchasing power due to inflationary pressures exacerbated by the aftermath of fuel subsidy removal, naira devaluation and increased borrowing costs.
“Over 70 percent of consumer income is now allocated to transportation and energy expenses, negatively impacting demand for manufactured products and leading to a piling up of unsold inventories.
“Additionally, the lack of patronage of locally produced goods, especially by government agencies, has contributed to high inventory levels.”
Ajayi-Kadir disclsed that the sector witnessed a reduction in real investment in assets in 2024.
Investment stood at N658.81 billion in 2024, a N359.51 billion (35.30 per cent) reduction against N1,018.32 in 2023, he added, but stressed that the half yearly (H1 2024) report shows real investment rose by N58.22 billion (19.39 per cent) to N358.51 billion in H1 2024 from N300.29 billion in H1 2023.
“This reduction in investment is attributed to a reduction in the confidence of manufacturers in the economy, high cost of plants and machinery due to inflationary pressures and the devaluation of the Naira.
“The average exchange rate increased to N1,535/$1 in December 2024 from N907.11/$ recorded in December 2023.”
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