Declining Growth in Manufacturing
Nigeria’s manufacturing sector grew by only 1.38 percent in 2024. Shrinking consumer spending and high borrowing costs slowed expansion.
Data from the fourth-quarter GDP report shows a slight drop from 1.40 percent in 2023 to 1.38 percent in 2024. The sector’s GDP contribution also fell to 8.21 percent from 8.64 percent.
Despite this, real GDP growth in the fourth quarter rose by 1.79 percent year-on-year. It exceeded the previous quarter’s growth by 0.41 percentage points and 2023’s corresponding period by 0.86 percentage points.
Challenges Manufacturers Faced in 2024
Manufacturers predicted weak growth due to economic difficulties. At the 2025 Presidential Media Luncheon in Lagos, MAN President Francis Meshioye highlighted operational struggles.
He cited inflation, currency depreciation, rising interest rates, high electricity tariffs, multiple taxes, and security concerns. These factors squeezed profits and reduced GDP contributions.
A major issue was the sharp rise in electricity tariffs, increasing by over 250 percent. Higher energy costs forced many manufacturers to seek alternative power sources, further straining finances.
The Impact of Naira Devaluation and Poor Infrastructure
The naira’s depreciation drove up raw material costs, cutting profit margins. Manufacturers struggled to stay competitive.
Steady power, good roads, rail systems, modern technology, and incentives are crucial for growth. Yet, poor infrastructure, especially weak transport networks, continues to hinder industrial progress.
Power Supply Woes and Rising Production Costs
Reliable electricity is vital for industrial productivity. However, in 2024, the national grid failed 12 times, disrupting businesses. Despite higher tariffs for Band A customers, power supply remains unstable.
Unreliable electricity forces manufacturers to rely on expensive diesel and petrol generators. This raises production costs and limits competitiveness.
MAN reports that energy consumes 40 percent of production expenses. In June 2023, the association estimated that Nigeria loses N10 trillion yearly due to poor power supply, about two percent of GDP.
Macroeconomic Pressures and Industry Outlook
The latest MAN CEO Confidence Index for Q4 2024 showed a decline in key manufacturing indicators. The report noted an 18.2 percent rise in production and distribution costs. Capacity utilization dropped by 0.8 percent, investment fell by 1.2 percent, employment declined by 0.7 percent, and production volume decreased by 0.3 percent.
CardinalStone Research analysts warned that manufacturers remain vulnerable to economic shocks. FX and interest rate changes intensified financial pressure. About 65 percent of listed manufacturers on the NGX reported foreign exchange losses in H1 2024.
Conclusion
Inflation, poor infrastructure, and high energy costs hurt Nigeria’s manufacturing sector. Without strong interventions, growth and industrialization will remain slow.
