Manufacturers’ N1.4trn unsold inventory weighs on operations – MAN’s President

Nigeria’s accelerating inflation rate is making many products unaffordable for consumers as manufacturers’ inventory of unsold finished goods rose by 12.9 percent in six months of 2024, according to the Manufacturers Association of Nigeria (MAN).

Inventory of unsold products in the manufacturing sector rose to N1.4 trillion in the second half of 2024 from N1.24 trillion in the first half of 2024, Francis Meshioye, president of MAN said at the 2025 Presidential Media Luncheon on Wednesday in Lagos.

Meshioye said the increase in inventory can be attributed to a weakened purchasing power of the consumers, brought about by diminishing real household income resulting from the ongoing escalation of inflationary pressures, weak naira and high interest rate.

“Inflation in Nigeria reached an alarming 34.8 percent by December 2024, diminishing consumers’ purchasing power and causing a decline in demand for manufactured goods,” he said.

“This inflationary burden also led to an accumulation of unsold inventory, which rose to N1.4trillion across the manufacturing industries,” he added.

MAN president noted that Nigeria’s manufacturing sector experienced myriad of macroeconomic and infrastructural challenges that several impacted its performance in 2024.

He stated that the sector faced mounting pressure from high inflation, a depreciating naira, rising interest rates, escalating electricity tariffs, record low sales, multiplicity of taxes and levies and militating security concerns.

These factors, according to him, collectively strained the sector’s profitability and curtailed its contribution to the nation’s GDP.

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He also noted that manufacturers were hit hard with “a drastic rise in electricity tariffs, with rates increasing by over 250 percent,” saying the surge in energy costs “became one of the highest operating expenses for businesses in the sector in 2024.”

Meshioye said as a result, many manufacturers sought alternative energy sources, further straining their financial resources and complicating their ability to remain competitive.

Also, MAN president said the devaluation of the naira stifled the profitability of manufactured goods as the cost of importing raw materials skyrocketed.

“At the same time, the floating of the exchange rate resulted in a steep depreciation of the Naira, which fell from N666/$ in mid-2023 to over N1700/$ by mid-2024.”

“This depreciation inflated the costs of imported raw materials and machinery, worsening the already strained profitability of manufacturers.”

On the high interest rates, he said, “Interest rates reached unprecedented levels, climbing to 27.7 percent by November 2024. This increase substantially raised borrowing costs, making it harder for manufacturers to access financing for expansion and modernisation.

He also expressed worry that manufacturing share of the GDP dropped significantly from 16.04 percent in Q4 2023 to 12.68 percent in Q2 2024.

“The combination of high operational costs, reduced consumer demand, and limited access to finance contributed majorly to this decline.”

“The rising interest rates, combined with inflation, severely limited the potential for investment in the sector, impeding long-term growth prospects.”

In order to address some of the economic headwinds, he called for the timely passage of the four tax bills before the National Assembly, implementation of the patronage of made-in-Nigeria products policy and taming of inflation.

He also asked the government to ensure food security and promote local sourcing of raw-materials and address policy inconsistency.

He called for the upgrade of infrastructure (roads and railways), promotion of energy security and downward review of electricity tariffs.

“There is no gainsaying the fact that manufacturing is pivotal to galvanising and sustaining the economic growth and development of Nigeria.”

“We seek the government’s alignment with our conviction that a win for the manufacturing sector is a win for the economy and by extension, a better life for the citizenry.”