Unsold products worth N1.24 trillion (Nigerian Naira) have piled up in warehouses during the first half of 2024.
Francis Meshioye, who leads the Manufacturers Association of Nigeria (MAN), revealed this on Monday in the association’s first-half economic report, saying that the amount of unsold goods has jumped by 357.57% compared to the same time last year. He explained that people aren’t buying as much because of three main reasons: rising prices, the government’s removal of fuel subsidies, and the weakening value of Nigeria’s currency, the naira.
“The inventory of unsold finished products in the manufacturing sector surged by 357.57 per cent year-on-year, reaching N1.24 trillion in H1 2024,” the MAN president said.
The manufacturing sector is showing other signs of struggle too. Factories are operating at slightly lower capacity than before – 56.4% in the first half of 2024, down from 56.5% in the same period last year. However, there was a small improvement of 2.8% compared to the end of 2023.
When adjusting for inflation, the actual output of manufactured goods dropped to N1.34 trillion from N1.36 trillion compared to last year. However, if you look at the raw numbers without adjusting for inflation, manufacturing output actually increased by 30.38% to reach N5.34 trillion. Meshioye explained that this increase in raw numbers was mainly because of rising prices, as shown by the inflation rate hitting 34.19% in June 2024.
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There was some good news: Nigerian manufacturers are using slightly more local raw materials – 56.03% compared to 55.4% last year. This shift happened mainly because it’s becoming harder to get foreign currency to buy imported materials.
Money invested in manufacturing grew to N250.13 billion in the first half of 2024, a 29.63% increase from last year. However, Meshioye pointed out that this increase mainly happened because the weaker naira made it more expensive to import machinery and equipment. In real terms, manufacturers weren’t actually expanding – they were just trying to maintain their current production levels in a tough economy.
Power supply to factories improved slightly, with manufacturers getting electricity for about 11.28 hours per day. However, they had to spend N238.31 billion on alternative power sources (like generators) in the first half of 2024, which was 7.69% more than in the previous six months. This increase came from higher prices for diesel, gas, and other energy sources.
