Nigeria’s manufacturing growth slows in 2024 as economic woes worsen

Growth in Nigeria’s manufacturing sector slowed to 1.38 percent in 2024 owing to worsening macroeconomic challenges amid shrinking consumer spending and high borrowing costs.

Data from the fourth quarter GDP report shows that growth in the sector saw a marginal decline of 0.02 percent from a 1.40 percent growth rate recorded in 2023 to 1.38 percent in 2024.

The sector’s contribution to the country’s gross domestic product for the period also declined marginally to 8.21 percent in 2024 from 8.64 percent recorded in the previous year.

Real GDP growth in the sector in the fourth quarter grew by 1.79 percent on a year-on-year basis, higher than the corresponding period of 2023 and the preceding quarter by 0.41 and 0.86 percent respectively.

Manufacturers had said in 2024 that the sector will record weak growth owing to the worsening challenges that impacted their operations in the year.

Francis Meshioye, president of MAN at the 2025 Presidential Media Luncheon in Lagos, said that Nigeria’s manufacturing sector experienced a myriad of macroeconomic and infrastructural challenges that severely impacted its performance in 2024.

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He stated that the sector faced mounting pressure from high inflation, a depreciating naira, rising interest rates, escalating electricity tariffs, record low sales, the 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.

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

Nigerian manufacturers need regular electricity, accessible roads, functional railways, new technology and incentives, all are crucial in driving growth and competitiveness in the sector.

However, Nigeria does not have adequate infrastructure to grow businesses, especially developed transport systems such as roads and railways connected to the nation’s seaports.

It is impossible to talk about infrastructure without discussing power. Energy is a key element of the production process.

In 2024 alone, the grid failed 12 times, plunging large parts of the country into darkness.

Despite the tariff hike for Band A customers—those meant to enjoy the most stable electricity supply—the power situation continues to deteriorate.

These persistent blackouts raise critical questions about Nigeria’s development trajectory and ability to drive its industrialisation.

Nigeria’s inability to supply and distribute sufficient electricity has left businesses at the mercy of generators powered by diesel and petrol, whose prices have surged in recent months.

This raises the production costs for manufacturers significantly and forecloses their chances of competing with international peers.

According to the Manufacturers Association of Nigeria (MAN), manufacturers spend 40 percent of their total production cost on generating energy for their businesses.

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In a June 2023 statement, the association put the annual economic loss caused by the inadequate power supply at N10 trillion, accounting for almost two percent of the country’s Gross Domestic Product.

The manufacturers association’s CEO Confidence Index for the fourth quarter of 2024 revealed that worsening impacts of the macroeconomic environment led to a decline in key manufacturing indicators.

“Production and distribution costs surged by 18.2 percent, capacity utilisation contracted by 0.8 percent, investment dipped 1.2 percent, employment declined o.7 and production volume dropped by 0.3 percent in the fourth quarter of 2024,” according to the MCCI report.

Analysts at CardinalStone Research said in a January note that the Nigerian manufacturing sector remains easily susceptible to macroeconomic headwinds, as was laid bare by the reformed-induced FX and interest rate pressures.

According to the analysts, about 65 percent of listed manufacturing companies on the NGX reported FX losses in half-year (H1) 2024.