Nigeria’s foreign exchange crunch in 2024 prompted manufacturers to increase their use of local inputs in a bid to cut costs and maximise value, according to the Manufacturers Association of Nigeria.
In its latest economic review for the second half of 2024, MAN reported that local raw material utilisation in the manufacturing sector rose to an average of 57.1 per cent, up from 52.0 per cent in 2023 — a 5.1 per cent increase over the period.
“This shift was largely driven by forex scarcity, high import costs, and government incentives promoting local content.
“Notable improvements were observed in wood & wood products, textile, apparel & footwear, and chemical & pharmaceuticals, while electrical & electronics continued to lag due to dependency on imported components,” the report said.
Nigerian manufacturers faced significant challenges in 2024 due to a prolonged foreign exchange shortage and a sharp currency devaluation, both of which disrupted business operations and increased production costs across the sector.
Capacity utilisation in Nigeria’s manufacturing sector edged up to 57 per cent in 2024 from 55.1 per cent in 2023.
On a year-on-year basis, the second half of 2024 recorded a 1.2 per cent increase compared to the same period in 2021, indicating a modest recovery in industrial activity.
“However, persistent challenges such as rising energy costs, forex volatility, and high interest rates constrained further growth.
“Sectoral analysis revealed that non-metallic mineral products, motor vehicle & miscellaneous assembly, and chemical & pharmaceuticals sectors recorded the highest improvements,” the report stated.
According to the report, inventory of unsold products in Nigeria’s manufacturing sector surged by 87.5 percent to N2.14 trillion in 2024.
MAN attributed the sharp increase to low consumer spending, the continued depreciation of the naira, and rising production costs.
The report highlighted that the food, beverage & tobacco, and textile, apparel & footwear sectors recorded the highest increases in unsold stock during the period.
Meanwhile, employment generation in the manufacturing sector remained largely stable, with only 606 jobs created in 2024—a modest 1.8 per cent rise compared to 2023.
However, the number of employees exiting manufacturing companies rose from 17,364 in 2023 to 17,949 in 2024, reflecting continued labour mobility driven by economic uncertainties, skill migration, and company restructuring, according to the report.
As a result, net new jobs in the sector stood at 16,820 in 2024—virtually unchanged from the 16,799 recorded in 2023.
