Unsold goods hit N2.14trn in 2024; MAN cites weak demand, high production costs

The inventory of unsold finished goods in Nigeria surged by 87.5 per cent to N2.14 trillion in 2024, the Manufacturers Association of Nigeria (MAN) disclosed yesterday. MAN said the surge was driven by weakened consumer demand, escalating production costs, and declining purchasing power. The Director General of MAN, Segun Ajayi-Kadir, disclosed this in the association’s […]

The inventory of unsold finished goods in Nigeria surged by 87.5 per cent to N2.14 trillion in 2024, the Manufacturers Association of Nigeria (MAN) disclosed yesterday.

MAN said the surge was driven by weakened consumer demand, escalating production costs, and declining purchasing power.

The Director General of MAN, Segun Ajayi-Kadir, disclosed this in the association’s second half of 2024’s economic review.

According to him, the Nigerian manufacturing sector faced a challenging but resilient economy in 2024, navigating macroeconomic instability, inflationary pressures, and policy-driven disruptions.

He said the real GDP growth remained subdued, reflecting the economy’s struggle with rising production costs, exchange rate volatility, and declining consumer demand.

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The DG noted that inflation surged to 34.8 per cent by the end of 2024, significantly eroding purchasing power and increasing operational expenses.

He said aggressive monetary tightening by the Central Bank of Nigeria (CBN), which raised the Monetary Policy Rate (MPR) to 27.50 per cent, further exacerbated borrowing costs for manufacturers, limiting expansion and new investments.

Ajayi-Kadir said the sector’s real manufacturing output increased modestly by 1.7 per cent year-on-year to N7.78 trillion, buoyed by increased activity in motor vehicle & miscellaneous assembly, non-metallic mineral products, and electrical & electronics.

However, he said a half-on-half decline of 3.1 per cent in real production reflected rising costs and weak consumer demand.

He said nominal manufacturing output rose sharply by 34.9 per cent to N33.43 trillion, primarily due to inflationary pressures and rising domestic prices.

The DG also disclosed that the manufacturing sector’s local raw material sourcing increased to 57.1 per cent in 2024, up from 52.0 per cent 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,” he said.

On the unsold inventory of finished goods, Ajayi-Kadir said, “The inventory of unsold finished goods surged by 87.5 per cent 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.”

He also hinted that real manufacturing investment fell by 35.3 per cent year-on-year to N658.81 billion in 2024, reflecting economic uncertainty and reduced expansion plans.

“However, H2 2024 witnessed a 19.4 per cent increase compared to H1 2024, as manufacturers cautiously resumed capital expenditures.

“In nominal terms, total investment declined by 11.3 per cent to N2.85 trillion, with Land & Buildings and Furniture & Equipment seeing the most significant declines,” he added.

The DG said the employment situation in Nigeria’s manufacturing sector remained relatively stable in 2024, with 34,769 jobs added, a 1.8 per cent 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,” he said.