COMFORT EKELEME
The Manufacturers Association of Nigeria (MAN) said that employment generation capacity of the manufacturing sector continued to decline, with only 2,606 jobs created in First Half (H1) of 2024, a 29.99 percent reduction from Second Half (H2) 2023.
MAN in its first half of 2024 (H1’2024) Economic Review said Year-on-Year, job creation fell by 37.83 per cent, reflecting the ongoing challenges within the sector, including economic uncertainties, inflationary pressures, and an unfavourable business environment.
Also, the association noted that the Chemical and Pharmaceuticals industry remained the highest job creator, while the Motor Vehicle & Miscellaneous Assembly industry created the fewest jobs.
MAN further stated that the electricity supply to industries showed some improvement in H1 2024, with average daily supply hours increasing to 11.28 hours per day.
“However, the increase in electricity tariffs by over 200 per cent imposed by DisCos significantly raised the cost of electricity for manufacturers. This, coupled with ongoing power outages, placed additional financial strain on the sector.
“The cost of providing alternative power continued to rise, with manufacturers spending N238.31 billion on alternative energy sources in H1 2024, a 7.69 per cent increase from H2 2023.
“The surge in costs was driven by higher prices for diesel, gas, and other energy sources, as well as the need for manufacturers to invest in self-energy generation due to unreliable power supply from the national grid.
“Investment in the manufacturing sector continued to rise, reaching N250.13 billion in H1 2024, a 29.63 percent year-on-year increase.
“However, this increase is primarily due to the depreciation of the naira, which inflated the cost of importing machinery and other essential assets. In real terms, investment spending did not increase, as manufacturers focused on maintaining current production levels rather than expansion due to the challenging economic environment,” MAN said.
According to the report, in Nigeria, capacity utilization in the manufacturing sector showed a slight year-on-year decline to 56.4 per cent in H1 2024, from 56.5 per cent in H1 2023.
However, there was a 2.8 percentage point increase compared to H2 2023, reflecting some recovery.
The sector faced significant challenges, including high-energy costs due to a 200 percent increase in electricity tariffs, forex scarcity, and declining consumer demand.
These factors collectively resulted in elevated operational costs and a difficult business environment for manufacturers.
Also, the report revealed that real manufacturing output in Nigeria declined by 1.66 per cent year-on-year in H1 2024, falling to N1.34 trillion from N1.36 trillion in H1 2023. Despite this decline, the sector saw a 9.97 per cent increase compared to H2 2023, driven by a baseline effect.
The sector’s challenges included rising electricity tariffs, exchange rate volatility, and higher energy costs, which heightened production costs amidst declining consumer demand.
MAN also noted that the persistent increase in interest rates by the Central Bank of Nigeria (CBN) further strained the sector.
