The Manufacturers Association of Nigeria (MAN) has reported a significant increase in unsold finished goods, which reached N2.14 trillion in 2024. This rise is mainly due to weak consumer demand, high production costs, and falling purchasing power. MAN’s Director-General, Segun Ajayi-Kadir, revealed this in the association’s latest economic review. He said the inventory of unsold goods jumped by 87.5% in 2024, though there was a slight 27.9% drop in the second half of the year, hinting at some improvement in sales and pricing. The worst-hit sectors were food, beverages, tobacco, textiles, and footwear, which recorded the largest volumes of unsold products.
The report blamed inflation, exchange rate instability, and tight monetary policies for the poor performance. Inflation climbed to 34.8% in 2024, squeezing consumer spending and raising manufacturers’ costs. The Central Bank’s hike in interest rates to 27.5% pushed lending rates to 35.5%, driving total borrowing costs for manufacturers up to N1.3 trillion.
Ajayi-Kadir noted that these policies limited credit access and stalled industry expansion plans. Although capacity utilisation slightly improved to 57% from 55.1% in 2023, manufacturers still faced major challenges like unreliable electricity and high energy costs.
Former CIBN President, Prof. Segun Ajibola, described the N2.14tn in unsold inventory as a serious warning sign. He explained that many Nigerian products rely on expensive imported raw materials, making them unaffordable for consumers. As a result, buyers pull back, leading to stock build-ups, potential factory shutdowns, or relocation.
Ajibola emphasized that a product’s success depends on market demand. When prices exceed what people can afford, they focus only on essentials like food, sidelining manufactured goods seen as non-essential.
He urged manufacturers to improve local sourcing of raw materials and invest in research to reduce reliance on imports, thereby shielding the industry from forex fluctuations.
MAN also reported a 42.3% increase in spending on alternative energy sources, totaling N1.11 trillion in 2024, due to unreliable electricity and frequent grid failures. Although power supply improved to about 13.3 hours daily, rising electricity tariffs still drove up production costs.
While the real sector grew slightly by 1.7% to N7.78 trillion, output dropped by 3.1% in the second half of the year. Investments in the sector also fell sharply by 35.3% to N658.81 billion, largely due to economic instability.
Ajayi-Kadir concluded that while there were small gains in local sourcing and production, the overall manufacturing sector struggled under tough economic conditions. He called for urgent policy action to improve the business environment, ease access to finance, and lower operational costs.
