Nigerian Manufacturers Face Rising Energy Costs and Operational Challenges in H1 2024
In the first half of 2024, Nigerian manufacturers spent a staggering N238.31 billion on alternative energy sources due to unreliable power from the national grid. The Manufacturers Association of Nigeria (MAN) reported that this represents a 7.69% increase from the previous half-year, attributing the rise to higher diesel and gas prices, alongside the need for self-generation investments. Despite some improvements in power supply, with average daily availability rising to 11.28 hours, manufacturers faced a significant cost hike due to a 200% increase in electricity tariffs by power distribution companies (DisCos).
The manufacturing sector faced additional pressures from rising operational costs, declining consumer demand, and inflation, as outlined in MAN’s recent sectoral survey. While some industries demonstrated resilience, others saw reductions in production, employment, and inventory turnover. MAN highlighted that the overall manufacturing output declined by 1.66% year-on-year to N1.34 trillion, though it improved by 9.97% from the latter half of 2023, largely due to baseline effects.
MAN’s report underscores the urgent need for Nigeria to implement stable economic reforms to ease the burdens on manufacturers. It calls for policy consistency, a better business environment, and economic diversification to combat inflation and boost job creation. With current challenges in electricity costs, exchange rate instability, and high interest rates, the path to recovery for Nigeria’s manufacturing sector hinges on strategic economic management and resilient policies.
