In spite of the 3.1% gross domestic product (GDP) recorded in the first half of 2024 in the manufacturing sector, growth in the sector fell to 1.28 percent during the period, from 2.2 percent in the corresponding period in 2023 (Q2’23).

The Q2’24 GDP Report of the National Bureau of Statistics (NBS) disclosed that the sector’s real contribution to the GDP declined to 8.46% from 8.62% in Q2’24 and 9.98% in Q1’24.

The overall contribution of the manufacturing sector to Nigeria’s GDP also diminished in Q2’24, with a contribution of 8.46% to real GDP, down from 8.62% in the same quarter of 2023 and significantly lower than the 9.98% recorded in Q1 2024.

The Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, stated that the dampened growth in the manufacturing sector was not unexpected, going by the outcome of the latest survey of confidence of manufacturing CEOs in the economy conducted by MAN.

The survey showed that the confidence of CEOs of manufacturing firms in the economy dropped to 51.9 points in Q2’24 from 53.5 points in Q1’24.

Ajayi-Kadir listed rising interest rates, the cost and scarcity of forex, uncertain tax policy and political insecurity as some of the major challenges facing the manufacturing sector.

His words: “The manufacturing sector is undoubtedly one of the most sensitive sectors to economic development. What happens in the sector reverberates throughout the economy.

“The escalation in the cost of electricity from the national grid is another big elephant in the room. In April, electricity customers saw their tariffs hiked more than threefold to N225 per kilowatt. Electricity accounts for between 28% and 40% of manufacturers’ cost of production.

“When prices are hiked like that, you can expect that many industries will not be able to operate at the levels they had been operating.

“Inflation has also eroded the disposable income of the average Nigerian so, people are buying less, and manufacturers are now even investing in sourcing warehouses for their unplanned inventory – that is, those goods that they couldn’t sell because of the dwindling disposable income of the average Nigerian.”