The Manufacturers Association of Nigeria (MAN) has declared that decreasing demand for manufactured products occasioned by a sharp drop in the purchasing power of consumers due to inflationary pressures led to 87.72 percent surge in unsold inventory to N2.14 trillion in 2024 from N1.14 trillion in 2023.

Director General of MAN, Segun Ajayi-Kadir, who disclosed this in the latest annual report of the association, noted that consumers now allocate more than 70 percent of their income on transportation and energy expenses.

He also highlighted the lack of patronage of locally produced goods, especially by government agencies, as a contributing factor to high inventory levels.

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His words: “The manufacturing sector grappled with a staggering surge in unsold inventory, skyrocketing to N2.14 trillion in 2024 from N1.14 trillion recorded in 2023 indicating 87.72 per cent increase over the period. “However, on half-on-half, the inventory reduced from N1,244.56 billion recorded in the first half to N896.22 billion recorded in the second half, indicating 27.99 percent reduction within the period

“This alarming trend arose from deteriorating consumer purchasing power due to inflationary pressures exacerbated by the aftermath of fuel subsidy removal, naira devaluation and increased borrowing costs.”

Ajayi-Kadir further stated: “Over 70 percent of consumer income is now allocated to transportation and energy expenses, negatively impacting demand for manufactured products and leading to a piling up of unsold inventories. “Additionally, the lack of patronage of locally produced goods, especially by government agencies, has contributed to high inventory levels.”

On manufacturing investment, the MAN DG also noted that the sector witnessed a reduction in real investment in assets in 2024.

According to him, investment stood at N658.81 billion in 2024, revealing N359.51 billion or 35.30 per cent reduction when compared with N1,018.32 recorded in 2023. He, however, added that the half yearly report revealed that the real investment increased by N58.22 billion or 19.39 percent to N358.51 billion in the second half of 2024 from N300.29 billion recorded in the first half of 2024.

“This reduction in investment is attributed to a reduction in the confidence of manufacturers in the economy, high cost of plants and machinery due to inflationary pressures and the devaluation of the Naira. The average exchange rate increased to N1,535/$1 in December 2024 from N907.11/$ recorded in December 2023,” he stated.